These were described as familiar risks, faced by new customers; new risks, faced by all customers; and the risks that need to be managed effectively by new on-line firms.
The FSA is the independent body established by parliament to regulate financial services and protect consumers.
The risks that new on-line firms need to manage include the new technology itself. The director, Michael Folger says,
"Whether it is ensuring you don't run out of postage stamps or that your on-line software is robust, the obligation for responsible organisation and control does not depend on the technology you have chosen to use. Whether it's Edwardian or new millennium technology, the FSA explicitly requires an adequate risk management system.
"We need to see a balance by firms: not bringing new products on stream until there is confidence in their robustness. And risk management demands that fall-back systems - yes, even the telephone - are available to ensure that customers' interests can be protected where on-line systems fail."
Folger went on to explain that the old risks are well-known by many, but are often less well-known by those newly investing via the internet. The common risks include:
Referring to what he described as “some pretty arresting failures of on-line systems over the past 12 months,” Folger said the new risks to all investors include those that are particular to, or accentuated by, dealing over the internet. He added:
"The internet does not respect jurisdictional boundaries and makes it possible for UK investors to operate an on-line account with firms overseas. ... The actual and perceived security of transactions is a crucial issue for novice or experienced investors dealing on-line."
"The FSA sees on-line trading as offering new value for the consumer wanting to deal execution-only. It is bringing price and company information, plus research, direct to the investor's PC screen at low or no cost. The internet seems to have opened up a whole new market."