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17/06/2003
'Good progress' but FSA reveals pensions deficit
In its annual report today, the Financial Services Authority (FSA) has said despite a difficult financial year it has made a "significant contribution" to maintaining market confidence and securing appropriate consumer protection.
However, in its Annual Accounts the FSA had a £102 million shortfall in its pension fund as of March 31, which it blamed on FRS 17 provisions.
It added: "The FSA believes that, when measured on a basis which is more relevant for financial management purposes, the deficit was closer to £50 million. The FSA remains able to operate as a going concern because the pensions deficit will not crystallise for many years and because of its statutory powers to raise fees."
In terms of day-to-day operations, the report pointed to tough market conditions that have exposed cases where firms have not treated their customers either fairly or with integrity – which the FSA expects to be corrected in coming years.
The FSA said: "UK consumers are vulnerable to targeting by unscrupulous firms and individuals who operate without authorisation. During the year we issued a number of consumer warnings and worked with other countries to take action against unauthorised sellers of financial products.
"During the year we opened 580 new enquiries – 38 cases were dealt with by a warning letter and eight were referred to other agencies. Emergency injunctions were obtained to freeze firms' assets and stop them from continuing unauthorised activity – and money has been returned to investors."
In terms of mortgage endowments, the FSA said that, after encouraging consumers to complain of instances of suspected mis-selling, by the end of 2002, product providers had received 185,000 complaints relating to mortgage endowments, had upheld 45% of them and had paid compensation of £170 million to policyholders.
In addition, 23 firms have agreed to compensate 433,000 consumers a total of £672 million to resolve product flaws.
During 2002/03 fines totalling £2.7 million were levied on firms for mortgage endowment mis-selling and related deficiencies in sales systems and compliance and control procedures.
In enforcing regulations, 315 cases against firms were opened as of April 1 and a further 138 cases were opened during the year. Penalties levied in 2002/03 were just over £10 million.
(GMcG)
However, in its Annual Accounts the FSA had a £102 million shortfall in its pension fund as of March 31, which it blamed on FRS 17 provisions.
It added: "The FSA believes that, when measured on a basis which is more relevant for financial management purposes, the deficit was closer to £50 million. The FSA remains able to operate as a going concern because the pensions deficit will not crystallise for many years and because of its statutory powers to raise fees."
In terms of day-to-day operations, the report pointed to tough market conditions that have exposed cases where firms have not treated their customers either fairly or with integrity – which the FSA expects to be corrected in coming years.
The FSA said: "UK consumers are vulnerable to targeting by unscrupulous firms and individuals who operate without authorisation. During the year we issued a number of consumer warnings and worked with other countries to take action against unauthorised sellers of financial products.
"During the year we opened 580 new enquiries – 38 cases were dealt with by a warning letter and eight were referred to other agencies. Emergency injunctions were obtained to freeze firms' assets and stop them from continuing unauthorised activity – and money has been returned to investors."
In terms of mortgage endowments, the FSA said that, after encouraging consumers to complain of instances of suspected mis-selling, by the end of 2002, product providers had received 185,000 complaints relating to mortgage endowments, had upheld 45% of them and had paid compensation of £170 million to policyholders.
In addition, 23 firms have agreed to compensate 433,000 consumers a total of £672 million to resolve product flaws.
During 2002/03 fines totalling £2.7 million were levied on firms for mortgage endowment mis-selling and related deficiencies in sales systems and compliance and control procedures.
In enforcing regulations, 315 cases against firms were opened as of April 1 and a further 138 cases were opened during the year. Penalties levied in 2002/03 were just over £10 million.
(GMcG)
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