Firms still not fair enough

FINANCIAL services companies are failing to treat customers fairly, according to the Financial Services Authority (FSA).

In a report published today, the FSA says firms are not doing enough to ensure equitable treatment over the lifetime of financial products.

Problems highlighted by the report include companies failing to take into account customers‘ needs when developing a product and, more worryingly, not thinking about the potential risks to people buying them.

Many providers did not have sufficient controls in place to ensure that the way sales staff were paid, such as through commission, did not influence which products they sold.

The FSA recognised there had been some improvements in the way firms handled complaints, but found this varied significantly between products and firms, with companies often failing to spot complaint trends.

A spokesman for the FSA said: 'Our study confirmed that firms are concerned with addressing the requirement to treat their customers fairly but signficant work is needed to improve practice in some areas.'

The report follows a review of the progress made by firms in implementing the FSA principle which requires companies to ensure fair treatment for customers.

The regulator carried out a study at six major financial services companies to see how customers were treated at various stages from when they were first sold a product to when it finished.

The FSA said it plans to carry out supervisory work with set up a group made up of people from the industry, consumer groups and the Financial Ombudsman Service to look at the issue.

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