FSA is consulting on FCA's use of temporary product intervention rules. The paper follows FSA's Discussion Paper of January 2011 on the possible product interventions it may wish to use. It consults on when and how FCA may make temporary product intervention rules and on a draft Statement of Policy that explains this. The paper looks at several issues connected to temporary product intervention, including:
- making rules to advance FCA objectives, specifically relating to consumer protection where urgent product-related issues arise or where firms create products that make competition difficult or ineffective (for example because the marketing strategy exploits customers);
- applying the rules in practice. This gives examples of when it might be appropriate to make rules, such as where products would be acceptable but for the inclusion or exclusion of certain features, products which are inappropriately targeted and thereby bring a risk of significant detriment and products that may be inherently flawed. FCA might also make temporary product intervention rules to address demand-side weaknesses where it feels market-based solutions cannot solve the risks of lack of competitive pressure;
- ensuring the rules are transparent and well communicated and maintained. The paper also looks at how FCA will decide whether to incorporate its new unenforceability provisions in relation to contracts entered into after the relevant rules take effect;
- the impact on existing customers and products. FCA will consider whether the need to protect potential consumers is greater than the potential harm to existing consumers;
- the European context. FCA product intervention rules cannot apply to product providers domiciled overseas but may apply to the distribution chain; and
- the impact on innovation and market entry. FSA acknowledges concerns of product providers that the providers would not wish to invest in product development if products might be banned, or where they do not have full control over the distribution chain. However, it does not think these concerns conflict with the reasons for using product intervention powers.
FSA asks for comments by 4 February 2013. (Source: CP12/35 – The FCA’s Use of Temporary Product Intervention Rules)