RISKY financial products could be banned without consultation for up to 12 months under new powers due to be held by the City's incoming watchdog.
Martin Wheatley, head of the Financial Conduct Authority (FCA), said the new organisation will take bold, firm action and will have a greater appetite to get things done.
As well as banning risky products, the FCA – part of a regulation overhaul to replace the Financial Services Authority (FSA) – will bring more enforcement cases with tougher penalties, Wheatley added.
The FSA published a document called Journey to the FCA outlining the role of the organisation when it launches early next year.
Presenting the document, Wheatley said: “A key new power will mean that we can step in and ban the sale of products that pose unacceptable risks to consumers for up to 12 months, without consulting first. We will also be able to ban misleading advertising.”
Elsewhere, Wheatley said the FCA will make supervisory judgments about a firm’s business model and forward-looking strategy and intervene if it sees unacceptable risks to the fair treatment of customers.
The FCA will also allocate fewer supervisors to specific firms, but react to problems faster and carry out more in-depth reviews across a particular sector or market.
Wheatley added: “The industry’s standing has suffered as the mis-selling scandals and other problems have taken their toll. This has damaged the reputation of firms across the industry.”
The financial services industry has been dogged in recent years by a series of mis-selling scandals, including payment protection insurance and interest-rate swaps.
The end of the FSA will see three new bodies created to regulate financial services, including the FCA, which will focus on protecting consumers from dodgy practices.
The Financial Policy Committee will have responsibility for monitoring the risks of the financial sector, while the Prudential Regulation Authority will take over responsibility for supervising the safety of individual financial firms.