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FCA should do more to protect consumers says trade body, as should IFAs

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The FCA is being asked to do more to protect consumers by tightening the rules around the provision of unregulated investments.

The call comes from the Association of Professional Financial Advisers (APFA) and they say that more needs to be done to prevent consumer losses in the first place, especially where there is a systemic cause. They say that they are seeing this same thing time and again in pensions.

Retail investors, says APFA, are being sold inappropriate unregulated investments held within SIPP, or SASS products. And APFA believes that prevention is better than cure. The priority should be the reduction of the size of the consumer losses and what’s more, the regulatory framework for unregulated products should be tightened.

APFA also says that IFAs have a key role to play as well. They should help by warning clients about fraudulent investments and ensure that they have robust controls in place. They should also report any suspected scams to the FCA and commit to preventing their retail client’s funds ending up in unregulated investments.

APFA did welcome the Government’s planned crack down on cold calling, although it thinks that the regulation in place also needs to be reconsidered, as it is not sufficiently stringent to prevent retail consumers from ending up with unregulated products.

APFA’s Director General Chris Hannant said: “The regulator, the government and advisers should work together to protect consumers from high-risk or fraudulent investments in which they are highly likely to lose their money. The FCA needs to do more as the current system is not working. A more thorough exploration of the options is needed with a tightening of the regulatory framework. Scammers are exploiting grey areas in the system to the detriment of consumers.

“Compensating people who have received a bad service, been mis-sold a product or conned should be the last resort. The level of FSCS levies is an indicator of the effectiveness of the regime in protecting consumers – the aim should be to minimise the need for compensation not just working out who pays for it.”

 

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