The winds of change in financial services

The task of overseeing the sale of financial products to the general public may soon be split into two different regulators as the UK Financial Services Authority (FSA) is considering different methods for tightening control.

According to a report posted on the website of the FSA closer supervision may be done to help make sure that each product is understand in terms of how a customer will interpret it as well.  It also may include conducting more thorough testing of all new financial products to make sure that all risks are properly evaluated and stated to consumers.  Additionally, the FSA is looking at ways to prevent certain financial products from being improperly sold to the public.

According to a Jones day lawyer in London, Harriet Terrier, the new proposals likely will fall in the idle of regulating the sales at their point of purchase and implementing pre-approval for all new financial products.  However, Terrier stated that the major burden is still on the banks themselves to properly create governing procedures that protect the public.

Over the last month the FSA has tightened pressure on the banking system forcing their hands at transparency by dealing out large fines meant to serve as a warning that they are to disclose all risks and carefully market financial products.

At the beginning of January the RBS and its subsidiary National Westminster bank was fined 2.8 pounds for failure to properly handle their customer complaints and just last week Barclays Plc was fined a whopping 7.7 million pounds for not properly disclosing risks associated with two funds that it marketed directly at thousands of retirees.