Better education, advice and TCF must be tried first
Association of British Insurers (ABI) director general Stephen Haddrill has challenged the Financial Services Authority’s (FSA) managing director for retail markets Jon Pain, to prove product regulation is necessary.
The challenge comes after Pain said the FSA was considering it.
"The ABI supports measures that help consumers make informed choices about financial services products, and believes that simplicity and transparency should lie at the heart of products designed to meet basic needs.
“But in a complex world, consumers do not come in one size, so markets should be allowed to deliver a wide range of products, suitable for as many people as possible. Regulation also adds cost, and so must be clearly justified. Before committing to extend regulation into new areas, the FSA needs to consider:
- Why is product regulation needed - can't the FSA's consumer protection objectives be met through existing powers, backed up by effective supervision of firms?
- What lessons can we learn about why previous regulation has not achieved enough before we launch another layer of rules?
Education, advice and TCF
"We believe that widening financial education and access to advice is the best means of ensuring customers get the products that are right for them - if the products are right, consumers are protected.
“The Retail Distribution Review includes proposals for simplified advice processes, and the FSA's treating customers fairly (TCF) regime also sets out strong principles for how firms should meet customer needs. FSA priorities, and those of the financial services industry, should be to ensure that these measures are fully implemented.
“We need to take care that new initiatives are not launched before current proposals are finalised, with their impact assessed and effectively supervised."
