The Financial Services Practitioner Panel warmly welcomes yesterday's comments by FSA Chairman Sir Callum McCarthy on the role of consumer responsibility in retail financial markets – an issue that it had prioritised highly on its agenda over the past year and on which
it had engaged in a series of discussions with members of the Financial Services Consumer Panel and the FSA. Panel members broadly share Sir Callum’s measured views and now look forward to taking the matter further with interested stakeholders.
Roy Leighton, Chairman of the Panel, said: "The Panel is very pleased that the Chairman of the FSA is launching a public debate on this very important and difficult subject, and appreciates Sir Callum's fair and thoughtful comments. An open, commonsense discussion on what may reasonably be expected from firms and consumers when they enter into financial contracts should benefit both sides by giving firms that have met their regulatory requirements and the principles of Treating Customers Fairly a greater degree of certainty, and by helping consumers to know what they have to do to achieve the best deal for themselves."
"We have long maintained that the lack of definition of the principle of consumer responsibility is one of the main drivers of high regulatory costs in the retail sector, as firms in search of legal certainty may incur excessive costs in being extra careful in complying with existing rules and regulations; these costs eventually get passed down to the consumer. The Panel hopes that Sir Callum's statement will lead to a frank, balanced and constructive debate on this complex issue. The Panel is very supportive of steps to improve Consumer Education and the independent provision of reliable Generic Advice to consumers."
In his speech to the Corporate Communications Special Interest Group, FSA Chairman, Sir Callum McCarthy said: "(…) Were the FSA to aim to relieve consumers of all adverse consequences, an environment would be created in which they no longer needed to weigh up the reasonableness of their financial decisions. No market can work effectively without involved consumers. To relieve consumers of retail financial services of the
consequences of their actions would destroy this as an effective market. (…)"
"(…) [T]he absence of reasonable care on the part of the customer is not irrelevant. The courts have often accepted various arguments from firms that customers have displayed "contributory negligence" because, for example: they withheld important or provided inaccurate information; omitted to read product particulars and/or implement fully a package of interrelated investment proposals; or failed to take into account relevant advice simultaneously being received from other professional advisers, such as accountants or lawyers. (…) They are things to which consumers should also have regard. Put simply, they can act in ways which reduce or eliminate the protection they can otherwise expect from the FSA, FOS or courts."