The Association of Professional Financial Advisers has called for the Financial Conduct Authority to clarify the consumer’s responsibility in making financial decisions.
Responding to the FCA’s consultation on its mission statement, Apfa also urged the regulator to produce and publish clearer metrics on its performance.
Apfa wants the regulator to use the level of Financial Services Compensation Scheme levies and the number of upheld Financial Ombudsman Service cases as a measure of success, and an indication of the need for the FCA to take supervisory or enforcement action.
Chris Hannant, Apfa’s director general, said: “Firms are better able to plan and manage their business if they have a better understanding of what to expect from the regulator.
“It is also important to set what is expected of the consumer and for this standard to be applied by all the regulatory family.
“A key part of this is defining and publishing appropriate metrics on the FCA’s performance.”
He said prompter action in respect of problems with pensions would have prevented many consumers experiencing misery, and reduced the cost borne by them through the FSCS levy.
In its submission Apfa said there was a tension in the way the FCA treats consumers.
On the one hand, it said, consumers are considered capable of understanding the risks and opportunities of a particular financial decision, such as the use of pension freedoms.
But on the other hand the FCA often appears to consider consumers to be naïve, credulous and unable to react rationally to events or information.
Apfa also called for the FCA to keep the money it raises through fines and hand it back to firms, so they can pass savings on to the consumer.
FCA chief executive Andrew Bailey announced plans for the mission in his first month at the regulator, making the announcement to the FCA’s annual public meeting, claiming the watchdog needs to explain how it uses the powers it has.
Since October the FCA has been consulting on its proposed mission, which includes achieving a "balance of responsibility" between consumers and firms.
The mission document published in October sought to set out when the FCA would intervene, saying it intends to be more transparent about the things it chooses to do and the things it decides not to do.
It also pledged to be clearer in communicating it's assessment of the underlying cause of harm or risk it is seeking to address.
The FCA also asked whether its approach to long-term products is working. It said they are affected by uncertainty and "present bias", making the regulation of these products "inevitably challenging".
It also sought suggestions for a proposed review of its handbook.
