Select Committee on Constitution Minutes of Evidence


Memorandum by the Financial Services Consumer Panel

INTRODUCTION

  1.  The Financial Services Consumer Panel (the Panel) was established by the Financial Services Authority (FSA) in December 1998 to represent the interests of consumers in advising the FSA on its evolving policy and monitoring its effectiveness. Subsequently, the Financial Services and Markets Act 2000 (the Act) made it a statutory requirement for the FSA to establish and maintain a Consumer Panel (and a parallel body known as the Practitioner Panel to represent the interests of practitioners). The relevant sections of the Act came into force on 18 June 2001.

ROLE OF THE CONSUMER PANEL

  2.  The main purpose of the Panel is to provide advice to the FSA. As such, it does not carry out responsibilities on behalf of the FSA. For example, it does not undertake consumer education; nor does it take up individual consumer complaints. The emphasis of the Panel's work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA's remit. The Panel has regard to the interests of all groups of consumers, including those who are particular disadvantaged in the context of financial services.

  3.  The Panel's principal functions are:

    —  To represent the interests of consumers by advising, commenting and making recommendations on existing and developing FSA policy and practices as appropriate.

    —  To speak on behalf of consumers by reviewing, monitoring and reporting to the FSA on the effectiveness of FSA's policies and practices in pursuing its duties.

    —  To keep under review and influence actual and potential developments in financial services to enable it to fulfil (a) and (b) effectively.

  4.  In addition, the Panel can advise the Government on the scope of financial services regulation; and consider other matters that assist it in carrying out its primary functions.

REPRESENTATIONS

  5.  Section 11 of the Act brought an important part of the formal accountability of the FSA to the Consumer Panel into effect. Under this section, the FSA is required to consider representations made by the Consumer (and Practitioner) Panels and, if it disagrees with a representation made by either of the Panels, it must provide them with a statement in writing of its reasons for disagreeing.

  6.  The Chairman of the Panel has quarterly meetings with the FSA Chairman.

  7.  The Chairman of the Consumer and Practitioner Panels were both members of the appointment panels for two important posts heading other parts of the FSA's accountability mechanisms: the Independent Complaints Commissioner and the Chairman of the FSA's Regulatory Decisions Committee.

HOW THE PANEL OPERATES

  8.  The full Panel meets about 10 times per year. In addition, smaller `working groups' meet monthly to discuss specific issues in more detail and to consider the Panel's formal responses to FSA and other consultations. FSA staff are invited to these meetings to discuss FSA policy proposals. From time to time, the Panel also commissions research to obtain a better understanding of consumers' views and to identify areas of concern. An information note on the work of the Panel is prepared monthly for the FSA Board.

BUDGET

  9.  The FSA's Board agrees a budget for Consumer Panel members' fees, expenses and any work commissioned by the Panel. The FSA also provides the Panel with a dedicated Secretariat of six staff to support its work.

ACCOUNTABILITY

  10.  The Panel publishes an annual report on its activities in which the FSA's effectiveness is assessed. Last year's report (attached) covered the 15 months to end—March 2002 as the Panel moved to align its financial year with that of the FSA; the report for the 12 months ending 31 March 2003 will be published in May. The panel also has a website at www.fs-cp.org.uk which contains information about the Panel's work and its members. The Panel publishes its formal responses to FSA and other consultation documents on its website; details of its consumer research are also available there. The website contains a facility to enable consumers to contact the Panel's Secretariat, but makes it clear that the Panel is not in a position to pursue individual or specific complaints from the public about financial services.

  11.  Last year, the Treasury Select Committee held a formal hearing with the Chairmen of the Consumer and Practitioner Panels to discuss their respective Annual Reports.

  12.  At the FSA's Annual Public Meeting, the Chairmen of the Consumer and Practitioner Panels are both given places on the platform to give their views on the FSA and its policy.

MEMBERSHIP

  13.  Panel Members are appointed by the FSA Board following an open recruitment process based on the Nolan principles; the appointment of the Chairman must have the formal approval of the Treasury. Colin Brown became Chairman of the Consumer Panel with effect from 1 January 2001, having been Vice Chairman since its inception in December 1998.

  14.  Members of the Panel have a wide range of relevant experience such as financial services regulation, working with vulnerable consumers, local authority enforcement, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public analysis, market research and the media. Biographies of the 13 current Panel Members are available at the Panel website: www.fs-cp.org.uk ch 2003


 
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