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.

The UK housing market looks set to get a major shake up soon with the launch of a cheap online estate agency service with the backing of the Tesco supermarket group. 

Spicerhaart, an estate agency in Bristol, is launching the new website iSold.com, initially aimed at sellers and buyers only in the Bristol area. Tesco will also advertise the service to users of its own website. 

The news comes shortly after the Office of Fair Trading (OFT) recently called for the establishment of more innovative online estate agency services to help drive down prices. 

The online service will have two key features. All dealings with both sellers and buyers will be conducted online or via the phone, with the overall business being kept separate from the Spicerhaart outlets in the High Street. 

And instead of the standard estate agency fees, of between 1.5% to 2% of the selling price, a basic online selling service will cost £999. 

As well as being advertised on the iSold website, homes for sale will also be advertised on property portals such as Rightmove and Zoopla. 

Neither iSold nor Tesco would divulge the nature of the commercial agreement between them but it is worth noting that Tesco already has a similar link up with the flower selling service Interflora. 

Back in 2007, Tesco briefly launched an online property selling business called Tesco Property Market, which allowed personal sellers to by-pass estate agents. In return for a standard £199 charge the sellers were able to advertise their own homes for sale and put up a Tesco notice board outside their homes. 

However, this meant that Tesco was deemed to be offering estate agency services and it quickly decided it could not make money if it had to comply with the requirements of the estate agency and property mis-description laws. 

Last month, the OFT called for the injection of greater competition into the estate agency business to help drive down prices. Its main recommendation was that sellers should haggle with estate agents to agree a lower fee than the typical 2% that is often charged. 

But the regulator also called on the government to change the law to make it easier for people to set up online home selling services, especially those aimed at people who wanted to sell their own homes themselves rather than pay an agent to do it for them. 

At the moment, online-only estate agents account for only 2% of all property sales in the UK, compared with 15% in the USA. With the growing use of the internet by all generations and the effects of the recession meaning that people are trying to save money wherever they can, we can expect online estate agents to be a large growth business in the next few years.