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Home > Regulation > UK Regulation

By Donia O'Loughlin | Published May 17, 2012

FCA to give firms one week to appeal intervention action

The incoming Financial Conduct Authority will seek to take “faster and more effective action” to tackle financial promotions deemed ‘fit for purpose’ and will give firms just one week to respond to any decision to withdraw a product, according to the regulator’s conduct specialists head.

Speaking at a conference in London today (17 May), Clive Gordon, who works in the supervision division at the Financial Services Authority, said the new body will be ready to use its new suite of powers “on day one” after they come into force and firms should therefore be reviewing their systems and controls now.

Mr Gordon said: “Assuming the new powers are granted from day one the FCA will be able to take faster and more effective action. We will use our powers to ensure the right outcomes for consumers.

“Where we require a firm to amend or withdraw a promotion we will expect them to do it promptly.”

Mr Gordon said the FCA will be “actively regulating” all aspects of the chain including the design, the development and the management of the product.

He said: “At the heart of our early intervention strategy is ensuring consumers are protected and get a fair deal.

“As far as immediate action is concerned it could be that if we identify a number of consumers who have made an investment that was after the promotion we may ask the firm to contact all the consumers and explain that the promotion was not fit for purpose.”

Mr Gordon admitted that there will be instances where firms do not agree with the FCA’s decision and in this instance, firms will have seven days to respond to the regulator.

He said: “The FCA will consider their response and write to the firm with their final decision. Subject to whether we stand by our initial decision we will publish the details of the notice. We will be ready to use the new power on the first day that we get it.

“That doesn’t mean of course that we will use it on day one, but if you are thinking of reviewing your firm’s systems and controls, governance and compliance for financial promotions, now will be a good time to do so.”

Mr Gordon emphasised that promotions are a very effective way of competing and earning a larger market share.

He said: “Effective advertising encourages consumers to find out about the products and may prompt them to buy. This is no different for the financial services industry.

“We want to see clear promotions so consumers can make an informed choice based on the knowledge that the product will do just as it says on the tin.

“The knock-on effect will be a more competitive industry. It is in a firm’s interest to explain their products and services clearly. Consumers tend to shy away from something they do not understand.

“We want firms to put treating customers fairly at the heart of their business model.”

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