Banking management bear burden of customer trust: FSA

The Financial Services Authority (FSA) will place a new emphasis on the way in which banks treat their customers when providing them with regulated financial services - backed by a readiness to use enforcement powers actively, FSA chairman Callum McCarthy told a bankers conference today.

Outlining the number of factors which impinged upon whether customers were supplied with the correct financial package for their needs, Mr McCarthy told the British Bankers Association Regulating Banking in Britain Conference in London that complex products, customers ill-equipped to understand finance, and "sales forces which too often have acted irresponsibly" lay at the source of the problems.

The FSA chief said that senior management of financial institutions bore a "central responsibility" as failures to meet a basic standard were "bad for the reputation of the financial services industry as a whole; and cause harm to consumers".

"But they can, and must, take the principal responsibility to ensure that their sales forces sell financial products and services in a responsible manner through paying full and careful attention to ensuring that: inappropriate products are not sold; the basic requirements of understanding the customer's position and needs are met; and internal controls to police these principles are in place and are operated; and the incentives for salesmen and women reward responsible behaviour," he said.

(gmcg)