Posted: 28th March 2013

As football’s international governing body changes offside and goal line technology rules, Martin Wheatley sits ready and waiting to use his hard fought for and controversial changes to the rules in financial services regulation on product intervention. Firms should proactively identify product problems and attempting to make amends before the regulating referee steps in.

Even after March’s final rules, great uncertainty remains about how product intervention will affect firms with some sure the powers will be damaging to segments of the market.

The Council of Mortgage Lenders fears the mortgage industry’s recovery may be under threat. Examples of use have now been given however.

The uncertainty around product intervention is inbuilt, to a certain extent, in that the regulator states “it is not possible to provide complete certainty around how and when the FCA will use temporary product intervention rules”. Regulated firms might prefer some form of goal line technology to understand exactly when “the FCA identifies a risk of significant consumer detriment which requires urgent action”, given this condition must be met for the FCA to consider the use of the powers.

What firms can be certain about is that the power will be used and, if appropriate, in the first 12 months of the FCA. Firms should therefore review and monitor their highest risk products to high standards: consider how many products you have – current and legacy. Does your market research point to a need for each product? Which products are the most profitable? Is there a defined customer segment for the product? As well as on boarding, is there an effective monitoring process to ensure the product remains fit for purpose? Use the findings from mystery shops, outcomes testing and complaints root cause analysis to be certain where weaknesses lie. Ultimately this will be the best indicator of where the new powers will be used to prevent customer detriment taking place.

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