The Financial Services Consumer Panel today said that the FSA must put consumer protection at the heart of the new simplified selling regime, with its consultation paper¹ published today. While acknowledging that there has been some movement in the right direction, the Panel believes that there is still some way to go.

The FSA has taken on board some of the main concerns of the Consumer Panel by defining the process as advice; requiring firms to check people's suitability and affordability; requiring written records to be given; and ensuring that consumers will have access to the Financial Ombudsman Service. These are all welcome.

However the Panel is still unhappy about some of the current proposals. For example, firms will not be required to show consumers the impact of charges through projection illustrations, and will not have to send any post sales confirmation; it is not clear what these new "advisers" will be called; or how much firms will be able to put responsibility onto consumers through the signing of disclaimers.

The FSA will have to demonstrate that the vast majority of consumers will get good outcomes from this process, and the Panel will monitor the third round of consumer testing, also announced by the FSA today. In particular, there will have to be sufficient and clear warnings and prompts for the consumer to pull out of the simplified selling process if they have other financial priorities. The Panel will also be responding in detail to the consultation.

Ann Foster, Chairman of the Consumer Panel said:

"These new stakeholder products will be aimed at people who will be buying products for the first time - the very people who will need good consumer protection due to their inexperience in this field. In the light of the announcement on the price cap, these consumer protection measures will be even more important as the impact of charges will affect the suitability of the product.

At the same time, ultimately a great deal of this will depend on how these products are actually sold by financial services firms, and how the sales people are incentivised. It is in no one's interests for stakeholder products to become the next misselling scandal. Certain key consumer protection measures must remain in place."

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Rebecca Tabor 020 7066 0902 (07971 660368)

A full list of Panel news releases, publications and consultation responses can viewed at the Financial Services Consumer Panel website at: www.fs-cp.org.uk.

1. The Financial Services Authority (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. The FSA must consider its representations and, if it disagrees with a view expressed or proposal made in the representation, it must give the Panel a statement in writing of its reasons for disagreeing.

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.

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 fourteen members of the Panel as listed below. For further information on individual members, see About the Panel.