The industry regulator, the Financial Services Authority is in the process of setting up a department to help reduce the number of financial products that are mis sold to consumers. The department will apparently contain staff that will vet advert procedures and also carry out investigations into the selling of particular products. These are known as themed visits and could cover the selling of Pensions or Individual Savings Accounts, as just a couple of examples.
Our View
In setting up this new department, the FSA will apparently be working closely with consumer groups, in an attempt to understand how and where problems can happen. Whilst we see this as a great advancement, the main problem when mis selling financial products is their complexity and the risks associated with them. But, risk is the most important part, in our view. If a consumer understands the worst that can happen to a policy they have purchased, and accepts that risk, there will be no surprises if it happens. This is a simple problem that needs to be addressed by the FSA and guidance rolled out to all advisers and product providers.