|The FSA is just the regulator.
So why should you care?
Because, just occasionally, it hits the nail on
the head. And because you should.
What does it do?
The FSA is the financial regulator established
under the Financial Services and Markets Act (FSMA) in 2000, replacing
a whole host of separate regulatory bodies. The regulation of the
whole Financial Services industry is entirely in its hands. It reports
to the Treasury.
The FSA has four stated objectives: to maintain
market confidence; promote public understanding of the financial
system; protect consumers; and to fight financial crime. It is significant
that the objective of "maintaining market confidence" comes first.
The private saver
It is an open secret that there are strong divisions
of opinion within the FSA on the extent to which it should get involved
in consumer issues. We have some sympathy. It is caught between
the King Kong of HM Treasury (which appoints its Board) and the
Godzilla of the Financial Services Industry.
Nevertheless it is all we've got, and if we are to
create constructive change in the system for private investment
it can only be done by pressuring the FSA (unless you have enough
clout to pressure the Treasury direct).
How to press
The FSA has the same difficulty dealing with
the great unwashed as any branch of the civil service. It issues
a stream of consultation and discussion papers, many of high quality.
But the process of response discourages anything other than professional
submissions. And 'professional' in this case frequently means 'industry
members fighting their corner'. There is no channel either for general
representations or specific comments on financial products.
It gets worse. If
you should manage to get a comment through, a provision of
the FSMA forbids the FSA to do anything other than acknowledge the
comments it has received. It may not publish them, tell you
what they are doing about them or tell you the result (unless the
matter gets as far as a prosecution).
Therefore any comments you make to them disappear
into a black hole. This is not encouraging.
There is another body called the Financial Services
Consumer Panel (FSCP) established to "represent the interests of
Heard of it? Thought not.This
is not the FSCP's fault. It has only a handful of staff and neither
the time nor the budget for self-promotion. Nor
can it afford to actually engage with the public. The Panel's website
states that "the Panel is unable to deal with individual consumer's
concerns" and "The Panel is interested to hear comments and views
from consumers on the way that financial services are regulated,
although it is not possible to respond to comments individually".
However the dozen panel members represent a
wide spread of interests and it remains one of the few consumer
bodies with the expertise and inclination to push the interests
of the consumer with the FSA.
But don't despair.
The FSA has been quite surprisingly proactive
in venturing into conflict with the Industry,
though it has tended to stop short of landing any damaging blows.
It has developed a consumer education website, MoneyMadeClear, that
is a long way from cutting edge in terms of its appearance and use
of educational tools but is at least an improvement on its previous
Our view is that if you have something sensible
to say you should make the effort to say it to both the FSA and
the FSCP. It's thankless, but it's possible that, cumulatively,
it could have some effect.
Anyway, these are the only shows in town.