The Financial Services Authority (FSA), Office of Fair Trading (OFT) and Financial Ombudsman Service (FOS) yesterday proposed the creation of a new consumer protection committee to scan for emerging risks.
The committee would identify any risks with the potential to turn into widespread problems, and determine fast and effective ways of dealing with them, whether through regulatory action or consumer complaints.
The work of the committee, set out in today’s discussion paper, would update the wider implications process, which is often triggered once a problem has already had an impact on both the industry and consumers.
The new committee would draw together specialists from the three bodies to spot emerging risks, increasing the ability of the regulators and ombudsman service to respond quickly and decisively to the threats in the market.
The focus on emerging risks also complements the FSA’s ongoing intensive supervision regime, where firms’ business models are scrutinised along with their product design and marketing material to assess whether any single aspect, or indeed the entire operation, poses unacceptable risks to customers or the wider industry.
Sheila Nicoll, FSA director of conduct policy said:
"Complaints handling is a priority area within the FSA’s intensive supervision agenda. The co-ordination committee is a clear indication of the intention, and will, of the authorities to work even more closely together to improve the experience of consumers, and to avoid problems happening in the first place."
Ray Watson, OFT director of consumer credit, said:
"Identifying and dealing with problems at an early stage is important for ensuring consumers do not suffer unnecessary harm from financial products. We believe that the proposals for a new co-ordination committee and the focus on risk will improve our ability to deal with problems before they become widespread."
David Thomas, interim chief ombudsman:
"The ombudsman service is committed to preventing complaints, as well as resolving them. It's key for regulators and the ombudsman service to continue working closely together to identify potential problems as soon as they emerge, to ensure that consumers are treated fairly and can have confidence in financial services."
Background
- Discussion Paper, Consumer Complaints (Emerging Risks and Mass Claims).
- The FSA’s consumer website Moneymadeclear has information for consumers on what to do if things go wrong, including a printed guide called 'Making a complaint' which can be downloaded or ordered on-line or by calling 0300 500 5000.
- The OFT is the UK’s consumer and competition authority working across the whole of the economy. Its Consumer Credit Group is responsible for regulating the consumer credit industry which includes all businesses that lend money, offer goods or services on credit, introduce individuals to credit, or engage in debt collection and debt advice.
- The Ombudsman Service is the official independent expert in settling complaints between consumers and businesses providing financial services.
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.