The Legislative Basis of Systemic Review and Compensation for the Mis-Selling of Retail Financial Services and Products

Abstract

This article examines a wholly new provision of the Financial Services and Markets Act 2000 (FSMA 2000). Section 404 FSMA 2000 has no direct antecedent in the legislation that governed the previous regulatory framework for the UK financial services industry and was introduced into FSMA 2000 with little debate and scrutiny at a late stage in the passage of that legislation. Legal and policy bases of section 404 are examined. These lie partly in the difficulties that beset the Review of Personal Pensions Business that began in 1992 under the previous financial services regulatory legislation. The article also looks forward at the new regulatory environment for retail financial services in the UK and asks whether the risk of the use of s 404 may hamper current public policy initiatives aimed at increasing savings and investment levels within the UK personal finance sector.