Head of FCA: We need greater protection for investors

The Momentum UK Team 25 January 2012

The head of the planned Financial Conduct Authority (FCA), Martin Wheatley told the Financial Times that the new regulator should work to protect investors from risky and complex products on which they may not have the know-how to make a rational decision.

Wheatley suggested that investors may not be able to grasp the full risk associated with some more dangerous investment products. In an interview conducted by the Financial Times he said "You have to assume that you don't have rational consumers", he also pointed out that consumers may be confused when "faced with complex decisions and too much information".

As of the December 2012 the FCA will be responsible for protecting consumers and regulating conduct and services offer by the financial services industry, succeeding the Financial Service Authority.

In spite of outlining a much more "interventionist style", Mr Wheatley also said that bans on products would be "relatively rare", and added that "interventions should be the last tool you grab when all others have failed."

Last week the consumer lobby group Which? called for the FCA to be given greater powers to regulate banks on complex charges to customers, following a study that suggested many products involved unnecessarily complicated fee structures leaving consumers unaware of the penalties that they could expect.