The UK Financial Services Authority identifies suitability concerns as one of the top risks facing retail consumers, as they grapple with the ongoing fallout of the financial crisis and recession.

The FSA published an analysis of what it sees as the main risks potentially facing consumers in the financial services sector over the next 12 to18 months. The report notes that consumers continue to struggle with the effects of a slower economy, low interest rates and poor returns on investments, and it says that the FSA found evidence that many people are trying to tackle this by saving more, shopping around and paying off their debt.

“As a result, one of the major risks consumers face is buying and being sold unsuitable products – everything from products that are too risky for them, to products they do not understand or that do not meet their individual circumstances,” it says.

“Consumers rely on financial firms and their products to provide them with vital services – literally the means to run their lives. They need to be able to trust that the products they buy work for them and that they are getting a fair deal. But our report today shows that consumers worry they aren’t being sold the right products or products they don’t need,” said Martin Wheatley, managing director, of the FSA.

“It is clear that the financial services industry – firms and regulator – have a lot of work to do. Our analysis means we can focus our work on the most significant risks facing consumers. It also helps firms understand how to avoid the bear traps of designing products for maximum profit but little benefit to customers,” he adds.

The risks identified in the report will be used by the FSA in its work with firms over the next 12 to 18 months. The regulator indicates that it aims to use more early intervention to try and stop issues from escalating into mass consumer detriment. It will also be holding a series of roadshows to help firms understand its view of the highest priority conduct risk areas.

The 15 categories of risks set out in the report include: complexity in retail investment products and services; firms’ responses to regulatory and/or legislative developments; inadequate complaints handling; investor compensation; product bundling; and, aligning business models to fair treatment of consumers; among others.