The panel is an independent statutory body and was established to advise the Financial Services Authority on the interests and concerns of consumers and report on the regulator’s performance in meeting its objectives.
This week it has published a briefing paper on consumer responsibility which argues that it is unreasonable to expect consumers to understand the detail of complex financial products and services.
The new Financial Services Bill, currently being discussed in parliament, contains a proposal that the Financial Conduct Authority should have regard to the principle that consumers should take responsibility for their decisions.
The FSCP argues that this principle creates a risk for consumers. It says that financial firms have an overwhelming advantage in knowledge and understanding and it is therefore essential the regulator ensures that products and services do what consumers reasonably expect.
Adam Phillips, chair of the FSCP, says: “Clearly consumers need to act sensibly when making decisions about financial services. However, all too often the products they are being sold are so complex and the risks involved so obscure that it is impossible for them to make reasoned decisions.
“This is why the panel believes that the FCA should be able to make rules to impose fiduciary responsibilities on the industry. This would ensure that consumers could be confident that the firms would act responsibly and treat them fairly.”
He adds: “Given the complexity of financial services, knowledge is power. This power currently resides in the hands of firms rather than consumers. It is time to redress the balance, not to load further responsibility onto consumers.”