FSA debates product intervention

The FSA has today published a discussion paper to open a public debate about how the regulator, and in future the proposed Consumer Protection and Markets Authority (CPMA), should pursue the objective of consumer protection and specifically the issue of product intervention.

As part of its new consumer protection strategy introduced last year, the FSA has already introduced a more "interventionist approach" with the aim of anticipating consumer detriment where possible and stopping it before it occurs.

The approach aims to reduce consumer detriment by dealing with problems earlier, scrutinising the whole of the product lifecycle from start to finish rather than just focusing on the point-of-sale.

The paper outlines how the FSA has started shifting towards a more interventionist approach with tighter supervision of the governance of product development.

It also sets out a range of future interventions that could be introduced in areas where the potential for customer harm is greatest.

These might include interventions such as banning products or prohibiting the sale of certain products to specific groups of customers.

In the foreword to the discussion paper, FSA chairman, Lord Turner, said: “The crucial issue is how far along this spectrum of earlier and more intense interventions we should progress. This debate comes at a critical time as the scope and powers of the CPMA are being discussed by the government, parliament and stakeholders. It is fundamental to shaping the regulatory philosophy of the new organisation.

“Our analysis has led us to the conclusion that a significant shift in approach is required but there are important tradeoffs to be struck – between consumer protection and consumer choice, between effective regulation to prevent customer detriment and the costs that that will inevitably impose.”

Click here to read the discussion paper. The consultation period will end on 21 April 2011.