Out-Law News 1 min. read
16 Jul 2003, 12:00 am
The industry gave a cautious welcome to the Financial Services Authority's discussion paper on proposed rules for face-to-face and distance sales of so-called 'simplified investment products.'
The paper followed Government review of July 2002, which recommended the development of a suite of simple and transparent regulated products, in respect of which the present approach to regulating the advice process – with qualified financial advisers – could be removed altogether.
Three options were presented in the paper:
The FSA says it is now favouring the second option, guided self-help.
Consumer groups, such as the Financial Services Consumer Panel, expressed some concern that the reduction in access to qualified advice would increase the risk of mis-selling of products.
Industry respondents, while broadly happy with the idea of using filtered questions to guide consumers towards a product, were concerned that they may be hit later by a retrospective mis-selling review, and that the suite of products would not generate a profit.
But the FSA is confident that the filtered questions approach is the right one to take forward.
Michael Folger, Director, Conduct of Business Standards at the FSA, explained:
"We still have to recognise that for some consumers even simplified investment products would be a poor choice. So, before taking any decisions, the next step is consumer testing of a filtered questions approach to the sales process. That will help us assess how effectively it can help consumers make sensible choices."
The feedback statement is available as a 25-page PDF from:
www.fsa.gov.uk/pubs/discussion/fs19.pdf