FSA is unrealistic on consumer responsibility – Consumer Panel

16 June 2009

Today the Financial Services Consumer Panel urged the FSA to abandon its unrealistic attempts to articulate consumer responsibilities in financial services.  Instead the Panel wants the FSA to focus on getting the industry to deliver products and services that are fit for purpose and genuinely designed to serve consumer needs. 

In its response to the FSA’s Discussion Paper^1., the Panel argues strongly against the concept of ‘consumer responsibility’.  It believes the retail market is suffering not because of consumers’ actions, but because of the behaviour of firms.  It also points out that financial products are quite different from other tangible consumer goods.

It is entirely reasonable that the FSA should be promoting sensible actions for consumers to take when seeking advice. However, the complexity of many financial products and the difficulty of finding an acceptable way to describe risk means that most consumers are ill-equipped to judge how a product will perform in future, and whether it meets their needs. By raising the flawed concept of consumer responsibility, and placing unrealistic expectations on consumers, the Panel fears that the FSA risks giving firms an excuse to evade responsibility for serving consumers well.     

Adam Phillips, Acting Chairman of the Financial Services Consumer Panel said:

“The FSA’s concentration on ‘consumer responsibility’ is unrealistic and unhelpful in discussions about how to create an effective and efficient retail market that delivers real benefit to the consumer, the industry and to society.  The regulator should focus its attention on the firms it authorises, not the consumers it is set up to protect.”

^1. Consumer Responsibility’ FSA DP 08/5 – Consultation period ending on 19th June 2009

Notes to editors

1. The FSA established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA’s performance in meeting its objectives. The Consumer Panel has statutory status.

2. The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit. What we're doing for consumers explains more about the work the Panel is doing.
   

3. The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.

4. There are currently ten members of the Panel as listed below (for further information on individual members, see Who is on the Panel)

Adam Phillips (Acting Chairman)
Kay Blair
Michael Chapman
Stephen Crampton
Caroline Gardner

Tony Hetherington
Nick Lord
David Metz
Lindsey Rogerson
Carol Stewart