Memorandum by the Financial Services Consumer
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.
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
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
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.
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
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.
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 endMarch
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
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