On December 3, the FSA published a consultation paper detailing proposals relating to the new Financial Conduct Authority’s (FCA) power to ban financial products without consultation in certain circumstances. Such temporary product intervention powers cannot last longer than 12 months, during which time the FCA may either consult on a permanent remedy or find an alternative resolution to the issue. The policy statement will set out the FCA’s policy and is not intended to constitute new rules.
The consultation sets out a number of circumstances where such powers may be invoked, including:
where there is a risk of mis-selling, particularly in the case of complex and niche products;
where the product itself is flawed; and
where certain non-essential features of the product are seen to cause problems for consumers.
Comments are invited on the consultation until 4 February 2013. It is intended that a final policy statement on the use of this new power will be in place by the ‘legal cutover’ date of 1 April 2013 on which the new regulatory regime is anticipated to come into force.