Financial Conduct Authority
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FSA reaffirms approach to consumer responsibilities

The Financial Services Authority (FSA) has today issued a feedback statement reaffirming its regulatory approach to balancing the responsibilities of consumers and firms, which it first set out in Discussion Paper 08/05. 

The 2008 paper articulated how the FSA considers consumer responsibility in its decision and policymaking.  For example, the intensity of regulation increases in line with the risks posed to customers by different products. Central to this is the obligation on firms to treat customers fairly.  The discussion paper also explained the links between this work and other FSA initiatives such as the continuing programme of Financial Capability and the FSA’s consumer communications.

In that publication the FSA also asked for feedback from industry and consumer bodies to gauge if a wider consensus could be reached as to what is the appropriate balance of responsibility between consumers and firms in the sale of financial services products.

Today’s feedback statement acknowledges that the responses reflected a variety of views and there was no consensus. In the absence of wider agreement on where the balance of responsibilities lies between firms and consumers, the FSA will maintain its current approach as set out in the discussion paper. 

Dan Waters, director of retail policy and conduct risk, said:

"The FSA believes in the importance of having a transparent policy-making framework.  The feedback statement and our original discussion paper set out for the first time the approach we take to consumer responsibility and will help the industry understand our approach to this important topic.

"We intend to take forward the positive dimensions of this work through our financial capability agenda and our wider consumer communications strategy.

"The more engaged, demanding and discerning consumers become, the better off industry and consumers will be."

Notes for editors

  1. Feedback statement on consumer responsibility.
  2. Discussion paper 08/5 on consumer responsibility can be found on the FSA website.
  3. The Financial Services and Markets Act (FSMA) establishes "the protection of consumers" as one of the FSA's four statutory objectives and requires that in deciding what might be the appropriate level of protection for consumers, we should have reference to the "general principle that consumers should take responsibility for their decisions".
  4. The National Audit Office in their 2007 review of the FSA concluded that: ‘The FSA should identify the responsibilities it wants consumers to take on when interacting with the financial services markets and how its financial capability programme, alongside other regulatory activity, will help to equip consumers for these responsibilities. It is also important that the FSA, in consultation with stakeholders, begins in good time to develop its strategic priorities and approach for financial capability beyond 2010-11.’
  5. The FSA made this commitment in its 2008/09 Business Plan: "As part of our work to embed more principles-based regulation and our work on the RDR, in 2008 we will carry out more work on the issue of consumer responsibility. We will re-engage stakeholders and publish a Discussion Paper in Q4 2008 setting out our thinking on the legal position, the actions consumers should take to protect their own best interests, and inviting views."
  6. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
  7. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.

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