Consumer Protection

Question 1

Consumer Protection

Answer 1

There are laws and organisations responsible for protecting the rights of consumers.
In relation to personal finance, they are there to help ensure that the consumer is not treated unfairly or exploited

Question 2

Financial Conduct Authority (FCA)

Answer 2

• The FCA is an independent organisation with a remit to regulate the actions of providers of financial services
• It is funded by membership fees charged to financial service providers
• The organisation’s work focuses on three key areas:
  • authorisation – permitting financial service providers to trade
  • supervision – ensuring procedures and practices are in the interest of the consumer
  • enforcement – using powers to ensure standards are maintained

Question 3

Financial Ombudsmen Service (FOS)

Answer 3

• The FOS is an organisation appointed by the government to represent the interests of the consumer in disputes with financial service providers
• It is funded by compulsory fees charged to all regulated financial institutions plus additional fees when actions are taken against an institution
• The FOS becomes involved in disputes only if they cannot be satisfactorily sorted between the consumer and the financial institution prior to involving the FOS

Question 4

Financial Services Compensation Scheme (FSCS)

Answer 4

• The FSCS is the organisation in the UK that will pay compensation to a consumer of financial services if the service provider is unable to
• The FSCS, for example, protects all savers in banks and building societies up to £85,000, i.e. if the financial institution goes bankrupt the savings will be refunded
  by the FSCS

Question 5

Office Of Fair Trading (OFT)

Answer 5

• The OFT is a government organisation that was established to regulate all markets, including financial markets
• The OFT’s aim was to encourage fair practices and healthy competition between financial institutions
• Since 2014 responsibility for financial institutions has been passed to the FCA

Question 6

Legislation Of Consumer Credit

Answer 6

• These are laws passed by the UK government to enforce the regulation of any firm offering credit to consumers
• Any firm offering credit, for example leasing, hire purchase agreements or credit cards, must be registered with the FCA