IFA criticises FSA plans

Electronic reports will be mandatory

The Chairman of the Society of Financial Advisors has criticised plans by the Financial Services Authority to improve monitoring of financial product sales.

Speaking to the BBC's Money Box programme, Nick Bamford said the FSA's plans - which will cost £1 million to set up and £600,000 a year to run - are merely "closing the stable door after the horse has bolted."

The FSA has proposed to "fully modernise" the way it collects information, in the hope it will enable the regulator to focus on areas that require closer supervision.

Specific information on sales of mortgage, insurance, and investment products will have to be submitted electronically at regular intervals.

One can never be certain that you will spot everything in advance of it happening Sarah Wilson, FSA

The move is designed to build an accurate picture of market activity, enabling the regulator to monitor the sale of all financial products more closely.

But Sarah Wilson, who is in charge of the project at the FSA, would not say the new system would have prevented financial scandals of recent years.

She told the programme: "We hope that having better information in-house makes it more likely that we will see things earlier.

"It certainly makes it easier for us to respond quickly... because we will know who is selling a certain product and be able to speak very quickly to them.

"But one can never be certain that you will spot everything in advance of it happening."

Building public confidence

Information from product providers - to include direct sales and those made via intermediaries - will be collected on a quarterly basis.

We all have to work hard to restore public confidence in the financial services industry Nick Bamford, Sofa

Retail firms, such as Independent Financial Advisors and mortgage and insurance brokers will have to submit information on resources, complaints, training and competence, every six months.

Nick Bamford said a lot of this information was already available. But he did accept that the whole industry had work to do to persuade the public that financial products were safe.

"After 15 years of regulation, I do believe we are beginning to get things right, but we all have to work hard to restore public confidence in the financial services industry."

The proposed system, which is to enter a period of consultation, will not be fully in place until 2007.

BBC Radio 4's Money Box was broadcast on Saturday, 20 September, 2003 at 12:04 BST.