The Financial Services Authority (FSA) is consulting on the approach the future Financial Conduct Authority (FCA) will take if it needs to make temporary rule changes to a financial product before consultation.
The Financial Services Bill includes this power as part of the FCA’s toolkit but rules made before consultation will last for no longer than twelve months, during which time the FCA will either consult on a permanent remedy or resolve the problem another way.
Some instances which may trigger temporary rule changes include:
Where a product is in serious danger of being sold to the wrong customers, for instance where complex or niche products are sold to the mass market.
Where a non-essential feature of a product seems to be causing serious problems for consumers.
Where a product is inherently flawed.
Where there is high risk to consumers – the FCA could actually ban a product, but only in very serious circumstances.
Other possible interventions include issuing warnings or using supervisory powers to require firms to amend promotional materials.
The consultation will run until 4th February 2013.