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FSA handed extra enforcement powers

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  • 13/10/2010
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FSA handed extra enforcement powers
The Financial Services Authority (FSA) has been granted the power to force businesses to deliver prompt and effective redress for customers.

The new tool will enable the FSA to force firms to review past sales and to revisit old complaints. The power was created by the Financial Services Act 2010, and activated earlier yesterday along with other changes by the regulator.

The new power is set to be used in instances where there is evidence of widespread or regular failings that have caused consumer upset.

Andrea Kinnear, spokesperson for the FSA, said: “The previous redress power would have needed parliamentary and HMT approval, but that is no longer needed.

“This enables us to use the new tool more thoroughly and effectively which is better for consumers.”

She added that while the new power will “not provide overnight solutions”, it is still a rule making power, which means the FSA would have to undertake the CBA, consult and then draft policy in the usual way before any scheme can be established.

Sally Dewar, the FSA’s managing director of risk, said: “This important tool increases our ability to get redress for consumers when firms have not followed our rules.

“However, this power is not a substitute for working with industry where there is potential to bring an issue to a fair and speedy conclusion.”

Which? chief executive, Peter Vicary-Smith, said: “The activation of this new power is good news for consumers. From endowment mortgages to Payment Protection Insurance, the financial services industry has consistently dragged its feet when it comes to paying proper redress.”

He added: “It is important that the FSA makes full use of this power to require firms to review their past sales and pay proper redress.”

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