Press Association
Sunday 12th February 2012
The City watchdog is due to announce plans to toughen up its consumer protection regime by vetting financial products before they go on sale.
The Financial Services Authority (FSA) plans to become more proactive by stopping risky products from being sold, rather than helping consumers get redress once the damage has been done.
The new focus will involve it working closely with firms as they develop new financial products to see if they contain risks for consumers, before they are made widely available.
It will also look at how products are promoted and sold, with FSA staff posing as mystery shoppers to try to spot potential mis-selling scandals before they develop.
It will also consider whether products are being marketed to the right people and whether they are suitable for all consumers.
The regulator said it planned to put more resources into protecting consumers, although it would not disclose a figure, saying its business plan for the coming year was due to be published next week.
But a spokeswoman stressed that it would be a "very resource intensive strategy".
Hector Sants, chief executive of the FSA, will outline further details of the new approach when he delivers the annual Lubbock Lecture in Management Studies at the Said Business School in Oxford.
There have been a number of mis-selling scandals in recent years, including payment protection insurance, which in some cases was sold to people who would never be able to claim on the policies.
Personal pensions, endowment mortgages and split capital investment trusts have also been sold to large numbers of consumers despite being unsuitable for them.
