FCA given power to instantly ban products

The new Financial Conduct Authority (FCA) will have the power to instantly ban unsuitable financial products without consultation. In a guidance document published yesterday, it was also revealed that the new authority, which will be replacing the Financial Services Authority (FSA) early next year, will be able to impose tougher penalties for financial misconduct, pursue criminal prosecutions and make supervisory judgements about a firm's business model and forward-looking strategy. "The FCA offers a huge opportunity for the regulator and firms to start afresh, and work in partnership to reset how we deal with conduct in financial services," said FSA managing director, Martin Wheatley. The guidance was welcomed by the Council of Mortgage Lenders, the Building Societies Association, the Investment Management Association and the Association of British Insurers. Consumer Focus warned, however, that "the test of the FCA will be whether it prevents toxic products such as PPI, mortgage endowments or split capital trusts in the future. Will it intervene early or will pressure from industry delay action? A model where customers are ripped off, and then awarded compensation years afterwards, is expensive and wasteful and serves consumers badly."