Financial product providers and distributors need to work together to treat customers fairly, suggests a new discussion paper issued by Britain’s Financial Services Authority.

In the paper — which is part of the FSA’s Treating Customers Fairly initiative — the FSA encourages providers to design their products with greater care, to provide higher quality information, to monitor distribution channels more effectively at a high level, and to undertake better post-sale analysis of the performance of products.

The FSA also encourages the distributors to scrutinize more closely information they receive from product providers to ensure specific products are suitable for specific consumers. It believes that this should result in fewer cases of unfair outcomes for consumers for example where a distributor believes on the basis of information from a provider that a product is suitable for a customer.

The paper takes a principles-based approach top the issue, and does not propose new rules. It is designed to help providers and distributors understand their respective responsibilities to consumers and help improve cohesion, confidence and efficiency in the combined distribution effort.

“Today’s paper is an important element of the Treating Customers Fairly initiative. It is designed to help ensure outcomes for consumers are fair regardless of the route by which they have received a financial product or whether it was provided and distributed by a single institution or by two or more,” FSA chief executive John Tiner said.

“I should emphasize that we are not placing new regulatory responsibilities on either providers or distributors. Nor are we looking for providers to ‘police’ their distribution channels or for distributors to transfer current responsibilities to providers,” he noted. “We know some firms are doing this already but we do expect providers and distributors to work together to ensure that consumers are dealt with in an effective and fair way. Providers should give more support and information to distributors of their products with a corresponding expectation that distributors should use product information effectively with consumers.”