Authorities in Britain are creating a new consumer protection committee that will scrutinize the financial markets for emerging systemic risks to consumers.

Britain’s Financial Services Authority, Office of Fair Trading, and Financial Ombudsman Service proposed the creation of the new committee to identify any risks “with the potential to turn into widespread problems”, and determine how to deal with them, either through regulatory action, or by allowing individual complaints to run their course.

The new committee, which would be comprised of specialists from the three authorities, would increase “the ability of the regulators and ombudsman service to respond quickly and decisively to the threats in the market”, they said.

The FSA says that this focus on emerging risks complements its new, more intensive supervision regime, where firms’ business models are scrutinized along with their product design and marketing material to assess whether they present any unacceptable risks to customers or the wider industry.

“Complaints handling is a priority area within the FSA’s intensive supervision agenda. 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,” said Sheila Nicoll, FSA director of conduct policy.

The FSA has released a discussion paper proposing the new body. Comments are due June 10. It notes that the timing allows for a consultation paper in the third quarter of 2010 on any rule changes arising from responses to this paper.

IE