The Financial Services Consumer Panel has called on the industry and the FSA to take more responsibility for the way consumers are treated if consumer confidence in the industry is to be improved.
In its annual report Consumer Panel chairwoman Ann Foster highlighted that consumers are being expected to take on the responsibility for making more and more financial decisions in the way that they save, invest and borrow money for the future. But she says the industry still does not provide enough simple information to allow consumers to compare products and services, demand quality, and resist pressurised selling and misleading advertising.
The panel has been disappointed that the FSA has delayed certain initiatives which could have improved information for consumers such as Key Facts as standardised information for all consumers in the process of buying an investment product. It says the FSA has also failed to take full advantage of being a single regulator, by allowing the term 'independent' to mean different things in investment and insurance selling.
However, it says the FSA has improved its systems to monitor and identify the up and coming consumer risks in the way products are being devised, promoted and sold, and to draw firms' attention to their responsibility to treat customers fairly.
The Consumer Panel is also pleased to see the FSA devote more resources to monitoring financial advertising for the coming year, and make progress on the development of a financial capability strategy. However, the Panel warns that financial education will not be a quick fix, and should not be used as a substitute for continuing robust regulation of financial services.
Foster says: “It has got to be in the interests of the financial services industry to improve the current level of consumer confidence, so that more people are able to consider their needs and buy the right products for them.
“But the industry must play its part in helping consumers. At the moment the industry is too product driven rather than consumer led. The FSA must come down hard on the industry when it tries to pull the wool over the eyes of consumers.”