Mis-Selling and the Responsibilities of Consumers

(By Robert Sugden) The Financial Services Authority (FSA) is in the process of being split into two parts.  From early 2013, its consumer protection functions will be taken over by a new agency, the Financial Conduct Authority (FCA), headed by Martin Wheatley.  Last week, in an address to the British Bankers’ Association and in an interview with the Financial Times, Wheatley set out the priorities of the FCA.  His message was that the FCA would be more interventionist than its predecessor, would give more weight to the findings of behavioural economics and be less ready to assume that consumers act in their own best interests.  He is quoted as saying: ‘You have to assume that you don’t have rational consumers’.  And:  ‘But what the FCA won’t be doing is … letting the market get on with it and expecting clear disclosure and a mandated sales process to do its job’.