The FSA has released a policy statement on temporary product intervention powers in the third of a series of documents from the regulator today (25 March).
Temporary rules made before consultation would last for no longer than 12 months and could not be renewed, the FSA said. During this time, the FCA will either consult on a permanent remedy or will work to resolve the problem another way.
The FSA said it will seek to use the powers where a product is in “serious danger” of being sold to the wrong customers, such as when niche products are sold to the mass market; where a non-essential feature causes problems for consumers; and where a product is “inherently flawed”.
Martin Wheatley, chief executive designate of the Financial Conduct Authority, said: “The creation of the FCA is our opportunity to reset conduct standards. This power, along with our other new powers, helps define how we will regulate.
“We know that some in the industry are concerned about us using this power too hastily; I want to be clear that we know proportionate judgement is needed and that is what we will exercise. I do not expect us to use this power frequently, but both industry and consumers need to be clear that we will not hesitate to use these powers where we have serious concerns.”
With just four working days before the end of the current regulatory reform, the City watchdog is pushing through changes ahead of a formal changeover. It is expected to finalise a number of policies in a final flurry of documents in the coming hours and days.
From 1 April, the FSA will transform into the twin-peaks regulatory body, split into the Financial Conduct Authority and Prudential Regulation Authority.
