FCA may ban products for a year without consultation

The successor to the Financial Services Authority (FSA) may have the power to ban certain types of products without having to consult.

Addressing the British Bankers' Association this afternoon, Martin Wheatley, who will head up the Financial Conduct Authority (FCA), explained how a ban is one of the product intervention powers it is set to be granted by the government.

Referring to the FSA's recent warnings about traded life policy investments - dubbed 'death bonds' - Wheatley detailed how the successor body would go even further.

"We expect to be able to take action to ban products like these for up to 12 months without having to consult - and so we won't have to rely on strong warnings alone," he said.

"A key new power will give us the ability to make temporary product intervention rules if there's an urgent need to protect consumers and we don't have the time to wait for the outcome of the normal consultation process."

Wheatley said a ban could relate to the sale of a particular type of product to all customers, or to certain categories of customer.

The FCA may also be able to mandate the inclusion or exclusion of specific product features.

Additionally, product sales could only be allowed in certain specified situations, i.e. through particular distribution channels.

Wheatley said he expected bans would be "relatively rare" and the "last tool that we reach for" as there will be a greater focus on how products are designed and sold in the first place.

Wheatley, who is already the managing director of the conduct business unit within the FSA, also repeated comments from a recent interview about the assumptions that need to be made about consumers.

"We have to realise that consumers aren't always in a position to take responsibility, because of their lack of financial knowledge and because we have to take a reasonable approach to what a normal person can understand about complicated products and risks," he explained.

The government is expected to present the Financial Services Bill to Parliament by the end of this month, setting out the role and powers of the FCA, as well as the the FSA's other successor body, the Prudential Regulation Authority.