The Financial Services Authority (FSA), Office of Fair Trading (OFT) and Financial Ombudsman Service (FOS) are forming a consumer protection committee.

It is designed to identify risks with the potential to turn into widespread consumer problems, and determine fast and effective ways of dealing with them, whether through regulatory action or consumer complaints.

The work of the committee, set out in a discussion paper today, would update the wider implications process, which is often triggered once a problem has already had an impact on both the industry and consumers.

Sheila Nicoll, director of conduct policy at the FSA, said complaints handling is a priority area within the FSA's intensive supervision agenda.

She explained, ‘The co-ordination committee is a clear indication of the intention, and will, of the authorities to work even more closely together to improve the experience of consumers, and to avoid problems happening in the first place.’

Ray Watson, director of consumer credit at the OFT said that identifying and dealing with problems at an early stage is important for ensuring consumers do not suffer unnecessary harm from financial products.

He added, ’We believe that the proposals for a new co-ordination committee and the focus on risk will improve our ability to deal with problems before they become widespread.' 

The focus on emerging risks complements the FSA's ongoing self-styled ‘intensive supervision’ regime, where firms' business models are scrutinised along with their product design and marketing material to assess whether any single aspect, or indeed the entire operation, poses risks to customers or the wider industry.