New FSA Fines Have the Interest of the Consumer at Heart

The Financial Services Authority (FSA) have introduced stricter fines in an effort to deter financial companies from selling products, such as pensions and life insurance, on commission - with the subsequent intention of giving consumers confidence that they are purchasing what they need by stopping mis-selling. So how will the new fines really affect consumers?

The new plans by the FSA come just after the release of its most recent annual report in which chairman Lord Turner highlighted the difficult year for the global banking system and those that are connected to it. It has no doubt been the most tumultuous time for the FSA since it was officially named in 1997, and it is perhaps worth noting that whilst it has regulated banks since the 90s, it has only regulated general insurance intermediaries (not including travel insurance) since 2005. Subsequently, the increasingly comprehensive authority of the FSA, as well as high profile failures of certain financial services over the last few years - makes their most recent moves seem all the more timely.

According to timesonline.co.uk, after February 10th insider dealers will be fined a minimum of £100,000, whilst full fines for companies could be as high as £50 million. The new fines come as reports surface that costs to consumers total £14.5 billion over the last 20 years - simply due to what the FSA calls ‘systematic mis-selling' that has been driven by high commissions.

So how will it really affect consumers? Aside from simply giving harsher punishment to companies and individuals who break the rules, according to dailymail.co.uk financial ‘advisors will be paid only by fees agreed with clients, rather than by commission paid for by a product provider.'

At fsa.gov.uk, Margaret Cole stated: "These proposals are an important step in pushing forward our ethos of credible deterrence…Moving to this new framework will enable our enforcement policy to continue making a real difference to consumers and to changing behaviour in the financial services sector."

Although, it may prove unpopular among advisers and financial companies, it seems that the moves toward more transparency and honesty can be seen as a positive side-affect of the recession.

If you would like to find out more about Life Insurance please feel free to come and have a look around http://www.confused.com/life-insurance