The Financial Conduct Authority must show its teeth
Adam Phillips, Consumer Panel Chair, said: “The Panel has been encouraged by the new organisation’s commitment to a different approach to consumer protection from the FSA it will replace.
“We have great expectations of the new Financial Conduct Authority. It has the powers to make a radical difference, it must be careful not to spread itself too thinly.
“Strong rhetoric must be matched by strong action and the FCA must be clear about its priorities, to ensure that it has sufficient resources at the appropriate level, with the necessary skills and expertise, to deliver what it has promised.”
With only four months to go until the new regulator takes over the Panel sees this as a huge opportunity to deliver real change for consumers and the way they are treated by the financial services industry.
“It’s not often that a regulator has the opportunity to refresh and refocus its activities,” Phillips said. “In the past the FSA took too long to investigate consumer harm leaving consumers to suffer.
“The FCA has strengthened analytical resources and enforcement powers; it has to use them vigorously if it is to make a difference. This is particularly the case with regard to ‘mortgage prisoners’.
“The FCA will need to be vigilant to prevent bad behaviour by lenders.”
If all goes to plan consumers will benefit from fairer treatment, tougher conduct regulation and better sales practices. The Panel says this should prevent any recurrence of mis-selling debacles like the payment protection insurance situation, which looks set to exceed a staggering £10 billion in compensation.
In this brave new world, the Consumer Panel is expecting:
• Effective prioritisation by the FCA so that the new regulator is not overstretched and can focus on key emerging risks and the root causes of consumer detriment;
• Higher penalties to remove firms’ incentive to engage in practices damaging to consumers and to act as a clear deterrent to firms who may decide to copy them;
• A renewed and meaningful focus on Treating Customers Fairly;
• More rigorous supervision of the mortgage sector to prevent lenders taking advantage of ‘mortgage prisoners’;
• A commitment to making sure everyone can get access to the financial services they need; and
• Vigorous deployment of analytical resources, rule-making and enforcement powers to promote effective competition which delivers real value to consumers.
But as Phillips said: “Any vision of a better consumer future will only become a reality if the FCA has the determination to use its new powers.”