A British investor advocacy group argues that it’s unreasonable to expect ordinary consumers to understand complex financial products, and it calls on regulators to impose a fiduciary duty on the industry.

The Financial Services Consumer Panel Wednesday published a briefing paper on consumer responsibility, which maintains that it’s not reasonable to expect consumers to understand the detail of highly complex financial products and services, and the risks they create.

The panel, which is a statutory body that provides advice to the UK Financial Services Authority from the consumer perspective, argues that the overwhelming advantage firms have in knowledge and understanding means that it is essential for the regulator to ensure that products and services provided by the industry should do what consumers reasonably expect.

“Clearly consumers need to act sensibly when making decisions about financial services. However, all too often the products they are being sold are so complex and the risks involved so obscure that it is impossible for them to make reasoned decisions,” says Adam Phillips, chairman of the panel.

The paper comes amid a parliamentary debate over new legislation, which would facilitate the creation of a new regulator amid the pending separation of the existing FSA’s prudential and conduct regulation responsibilities. The legislation contains a proposal that the new regulator (the Financial Conduct Authority) should “have regard” to the principle that consumers should take responsibility for their decisions.

“Given the complexity of financial services, knowledge is power. This power currently resides in the hands of firms rather than consumers. It is time to redress the balance, not to load further responsibility onto consumers,” Phillips says.

He adds that the panel believes that the new FCA should be able to make rules to impose fiduciary responsibilities on the industry. “This would ensure that consumers could be confident that the firms would act responsibly and treat them fairly. At present, the financial services industry is beset by low levels of compliance with regulation and high levels of complaints,” he says.