The temporary rules, which may see the authority limiting the use of certain product features or banning a product from being sold to some or all customers, would last for 12 months. During this time the FCA will either consult on a permanent remedy or will work to resolve the problem another way.
Some of the instances in which the FCA may consider making temporary rules include when a product is in serious danger of being sold to the wrong customers, when a non-essential feature of a product seems to be causing serious problems for consumers and when a product is inherently flawed.
Martin Wheatley, CEO designate of the FCA, said: “The creation of the FCA is our opportunity to reset conduct standards. This power, along with our other new powers, helps define how we will regulate going forward.
“We know that some in the industry are concerned about us using this power too hastily; I want to be clear that we know proportionate judgement is needed, and that is what we will exercise. I do not expect us to use this power frequently, but both industry and consumers need to be clear that we will not hesitate to use these powers where we have serious concerns.”
Previous Incidents
In 2011 the FSA came under fire for proposing a ban on the sale of traded life policy investments (TLPIs), so called “death bonds”, and other non-mainstream investments such as Unauthorised Collective Investment Schemes (Ucis).
The City watchdog said it had found significant problems with the way TLPIs were designed, marketed and sold to UK retail investors, which had led to ‘significant consumer detriment’.
However, in April 2012 it announced that the guidance was an interim measure, and that it would consult on new rules imposing restrictions on the promotion of non-mainstream products, including TLPIs, to retail investors. This was expected to widen the net and dampen the criticism that just one product type was being targeted.
