FSA has published its first Retail Conduct Risk Outlook, which forms part of the replacement for the old Financial Risk Outlook. This analyses current and potential risks and is a key tool in FSA’s consumer protection strategy to identify risks earlier, proactively intervene earlier in the product chain and prevent consumer detriment. The document covers:

  • the macroeconomic background and outlook for households;
  • regulatory background and outlook: this section includes detail of new requirements the retail industry will have to implement, including an analysis of the impact of the Retail Distribution Review (RDR) reforms;
  • firms and supply of financial products: this section looks at how different sectors of the retail financial services industry have been affected by changes in products and their behaviour. It looks at the effects of the economic climate and regulatory change;
  • important segment-specific effects on consumers;
  • current and emerging risks and potential concerns. Within current risks, FSA includes treatment of mortgage customers and sale and marketing of structured investments and deposits. Emerging risks include concern at "widespread disengagement" with the new Banking Conduct of Business regime, weaknesses in networks and platforms and risks associated with unregulated collective investment schemes. Potential concerns include generating income through fees in banking, risks associated with bundling products and cross-selling and risks that RDR implementation may create.

FSA will publish the Prudential Risk Outlook in March. (Source: Web page and Retail Conduct Risk Outlook 2011)