The Financial Ombudsman Service (FoS) and the Financial Services Consumer Panel (FSCP) have both recently published their responses to the FSA’s discussion paper DP08/5.
Neither organisation was supportive of the FSA’s approach as they considered that the FSA were attempting to impose legal duties and obligations on the consumer. FoS commented that the FSA do not have power to impose obligations on consumers.
The discussion paper included in Annex 1 a list of actions the consumer could take which FoS stated will be helpful, but they also indicated that the list should not be taken to be “a list of things, the absence of which would automatically indicate recklessness, carelessness or failure to mitigate loss”. This is a clear indication that FoS will not necessarily find against a consumer or reduce the level of compensation to be paid to the consumer simply because they have failed to take one or more of the actions listed in the Annex.
The FSCP support the FSA concept of simple products for simple needs but stressed the need for the industry to pay more attention to product design to ensure firms deliver products that are fit for purpose and designed to genuinely serve consumer needs. Alarmingly the FSCP believe that the FSA should consider taking more action to protect consumers and this included making more rules.