New financial services rules in the UK
The loosening of financial services regulation in the UK does not give companies free rein to dishonestly market their services, the industry regulator has warned.
The introduction of principles-based regulation, where companies adhere to a basic set of principles rather than prescriptive regulations, comes into effect on November 1, with the Financial Services Authority (FSA) stating the new system would allow the sector to better tailor products for their audience.
The head of the FSA’s “treat customers fairly” (TCF) strategy, Nauisicaa Delfas, said companies are still required to be clear and honest about their financial products.
“We recognise there is more than one way to achieve the outcomes of ‘fair, clear and not misleading’ promotions,” she said. “Principles-based regulation is not intended to be process-driven. What matters is the outcome achieved.”
The new rules require companies to clearly state “important information”, any risks involved with a product and be clear and understandable to the targeted group.
Ms Delfas says the FSA’s new approach doesn’t weaken regulatory structures. “Fewer rules do not mean lower standards and we would expect to see the new rules, combined with our approach to TCF, has a positive effect on the level of compliance.”
The FSA receives about 70 complaints each month about financial products. About 300 complaints are amended or withdrawn after FSA intervention each year.
The introduction of principles-based regulation, where companies adhere to a basic set of principles rather than prescriptive regulations, comes into effect on November 1, with the Financial Services Authority (FSA) stating the new system would allow the sector to better tailor products for their audience.
The head of the FSA’s “treat customers fairly” (TCF) strategy, Nauisicaa Delfas, said companies are still required to be clear and honest about their financial products.
“We recognise there is more than one way to achieve the outcomes of ‘fair, clear and not misleading’ promotions,” she said. “Principles-based regulation is not intended to be process-driven. What matters is the outcome achieved.”
The new rules require companies to clearly state “important information”, any risks involved with a product and be clear and understandable to the targeted group.
Ms Delfas says the FSA’s new approach doesn’t weaken regulatory structures. “Fewer rules do not mean lower standards and we would expect to see the new rules, combined with our approach to TCF, has a positive effect on the level of compliance.”
The FSA receives about 70 complaints each month about financial products. About 300 complaints are amended or withdrawn after FSA intervention each year.