FCA: Product regs won't end innovation
Wednesday 25 January 2012 - by Karina Whalley
Addressing the British Bankers' Association, the FCA's head Martin Wheatley laid out his vision for the new regulatory body and said product intervention will be just one of many regulatory tools used in protecting consumers.
Along with the Prudential Regulation Authority, the FCA will succeed the Financial Services Authority by the end of the year and regulate over 24,000 firms including smaller brokers, advisers and markets in the UK.
Cases that warrant FCA intervention include inherently flawed products, the widespread promotion of a product to unsuitable customer groups and products where there is a strong incentive for misselling.
Wheatley said intervention could entail a ban on the sale of a particular type of product to certain groups of customers or it could mean forcing companies to include or exclude specific product features.
But the former chairman of Hong Kong's Securities and Futures Commission acknowledged the difficulty in deciding and said the majority of products are neither inherently good nor bad.
The body's approach will therefore be flexible and proportionate, Wheatley said.
"Rather than going in after something has gone wrong, the FCA will take an earlier judgement as to which products are unsuitable in which circumstances," the FCA chief said.
The authority is also looking into issuing earlier warning notices to the public when they detect an issue and have to take enforcement action. Currently it is only made public once a fine or ban has been imposed.
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