MARTIN Wheatley, chief executive of the newly formed Financial Conduct Authority, has pledged to bring a more human face to regulation to encourage better decision-making by consumers.
The FCA is one of two bodies replacing the Financial Services Authority, which came under severe criticism for its failings in the run-up to the credit crunch.
His comments also follow a serious of mis-selling scandals engulfing the banking industry, from payment protection insurance to interest rate swaps for small business loans.
Loading article content
In a speech due at the London School of Economics last night, Mr Wheatley said: "I want the FCA to bring a more human face to the regulation of financial services; a more pragmatic approach to regulation.
"Not only to defend against sharp practice but also to encourage better decision-making among consumers.
"The best financial service companies, the most consumer-focused, go to considerable pains to make sure their customers are steered towards the best products and the most suitable."
Mr Wheatley, who used to run Hong Kong's Securities and Futures Commission, said that suggesting consumers are ultimately responsible for making poor decisions has its limitations.
He said: "'Buyer beware' becomes hard to defend when unsophisticated customers are buying seriously complicated financial products, where the risk of failure is far more dangerous than a decision in the supermarket to buy three bananas instead of one. There are questions many investors simply will not ask because they are humans, not automatons."
A research paper published by the FCA yesterday showed the many consumers do not respond when told by a financial institution they have been mis-sold a product and could be due compensation. Women are even less likely to answer a letter if it was signed by a company's chief executive, the research found.
The researchers said: "First, women could be negatively affected by introducing a personalised signature in general – that it is perceived as false or disingenuous and therefore reduces propensity to respond," .
"Secondly, women could be less likely to trust or respond to messages delivered by men."
Comments & Moderation
We moderate all comments on Herald Scotland on either a pre-moderated or post-moderated basis. If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules
Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.