The FSA: Is it too little too late?
The director of the Financial Services Authority (FSA) has said this week that his organisation is going to increase protection for consumers against poor quality financial products. This is part of a strategic move away from compensating victims when the damage has already been done to a more preventative approach.
Over the past few years many mortgage customers have been hit by some severe mis-selling scandals, some of which were partly responsible for the beginning of the credit crunch two years ago.
The director, Hector Sants, speaking on Radio 4’s Today program, said the FSA would now take a dramatically different approach to protecting customers.
He admitted that until now the FSA’s approach had meant waiting until there was clear evidence that something was wrong, an approach which has left many customers at risk and vulnerable.
Even though the FSA sought to deliver redress where wrongdoing was found, firms have continued to make substantial profits from exploiting market failures. Fines and past business reviews have been proven not to be a sufficient deterrent.
Mr Sants’ comments come when his organisation, the FSA, is fighting for its survival. The Conservatives have said they will scrap the FSA and hand some of its powers to the Bank of England if they win the election.
Last month Mr Sants announced that he would step down as head of the FSA this summer.He is believed to be keen, before he goes, to push through proposals aimed at giving consumers better protection when buying mortgages as well as pensions and other investment products.
The FSA was itself set up in the wake of several investment scandals which had rocked consumer confidence in the industry. That it is now trying to change its strategy to finally offer a much needed level of protection suggests that the FSA is yet another example of the gimmick organisations set up by the Labour government to appear proactive on issues they could barely understand, let along tackle competently.
