Interest Rate Action 3 of 3 – Complain

Financial Services Authority (FSA)

The FSA has considerable powers in the financial world, and as the eight recent arrests to do with insider information trading shows does bite as well as bark. While for immediate consumer/company relationships the OFT is the main regulator, the FSA is more concerned with the policies and how the policies are employed.

In my opinion if the FSA is made aware of the imposition of vastly increased interest rates on customers who have done nothing to merit any change at all it will examine the companies acting in this way in fairly minute detail; my euphemism for possibly threatening them with major legal action. My opinion let me make clear.

To bring that about the FSA must receive a lot of letters complaining about the practice so it both knows it is widespread and can see which companies are engaged in this unfair practice.

So why should this body help our cause in getting sensible interest rate limits set? Well, in its High Level Standards, the FSA has some clear pointers as to the attitudes a company should have.

For example no.6 says ‘A firm must pay due regard to the interests of its customers and
treat them fairly.’ No equivocation. Notice again that word fairly.

Seven talks of communication and that it must do this and in a way that is ‘clear, fair and not misleading.’ The next standard tells the company to ‘manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.’ No excuse for not being aware of the effects of an action in its customers!

No.9 is very interesting. Although it may be mostly aimed at the investment arms of banks it nonetheless is a clear message for all the activities of these institutions. Here is the whole sentence: A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment.

There is also the FSA’s Statements of Principle and Code of Practice for Approved Persons. Just glance at some of the expectations in the seven statements of principle.

‘An approved person must act with’
-due skill, care and diligence;
-take reasonable steps to ensure that the business of the firm for which he is responsible in his controlled function is organised so that it can be controlled effectively; and
-must take reasonable steps to ensure that the business of the firm for which he is responsible in his controlled function complies with the relevant requirements and standards of the regulatory system.

So the letter needs to be very similar to the one to the OFT, but this time we are challenging the way in which the business is run in relation to the duties in forming and carrying out policies. Once again the question of fairness plays a big part, but here we can also ask if due care is being exercised, if the interests of customers are being fairly assessed and acted upon and if the decisions that have brought this about are within the expectations for an approved person.

You should write to them at:

Financial Services Authority
25 The North Colonnade,
Canary Wharf,
London E14 5HS

Joseph Harris
Debt Control Man


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