In a discussion paper released Friday, the UK’s Financial Services Authority aims to explore the steps the regulator or others could take to help consumers understand and protect their own best interests more effectively.

The FSA says that while it has no power to impose responsibilities on consumers, it is required by law to consider the general principle that consumers should take responsibility for their decisions when setting its consumer protection agenda. To this end, the discussion paper aims to provoke debate and bring greater clarity to the FSA’s approach to consumer responsibility, it explains.

“Responsible and well managed firms that treat their customers fairly are crucial… However, we also believe that markets will work more effectively if consumers are more involved, more capable and empowered,” said Dan Waters, director of retail policy & conduct risk at the FSA. “While we do not regulate consumers, we believe that we can work with firms, industry bodies and other stakeholders to encourage and enable consumers to consider their own interests more effectively in their decision making.”

The FSA said it believes that many of the positive outcomes of this work – such as greater engagement, better decision making by more capable consumers, a reduction in complaints and greater understanding around what happens when things do go wrong – may only be realized over the longer term. However, in the shorter term the regulator hopes to reach a greater consensus among stakeholders as to the nature of consumer responsibilities and the sensible actions that consumers should take when engaging with the financial services industry.

The paper was immediately met with criticism from the UK’s Financial Services Consumer Panel which said, “Why is the Financial Services Authority focusing on consumer responsibility at a time when large sections of the industry are not giving consumers a fair deal?” According to the FSCP, this is not the time for the FSA to be debating responsibilities for consumers, and it questions why the FSA is publishing a paper on this subject when consumers have little confidence in the financial services market and even less enthusiasm to engage with it.

“Clearly, the industry has been putting pressure on the FSA to increase consumer obligations. While we are not arguing with the need for consumers to answer questions honestly and read key information, the FSA document provides an opportunity for the industry to attack consumers’ rights, when it is the industry itself which needs to get its house in order and take responsibility for its actions,” said Adam Phillips, the FSCP’s acting chairman.

“Over the past few months we’ve seen consumer confidence fall to unprecedented low levels. It’s also a time when many firms have been exposed as not giving consumers a fair deal, from the selling of Personal Protection Insurance, to pension transfer advice and dealing with mortgage arrears,” Phillips added. “We have told the FSA that this is not the time to be discussing consumer responsibility, and we will continue to pursue this line vigorously with the FSA over the coming months.”