Peers' hopes for banking watchdog

The Government's proposed new banking watchdog should make it easier for consumers to obtain information about products to avoid "nasty surprises", peers have urged.

Labour's Baroness Drake said the Financial Conduct Authority (FCA) should have regard to the ease with which consumers could obtain appropriate services which represented good value for their money.

"Consumers need to be confident that once they have entered into a contract they will not be subject to any unexpected or nasty surprises," she said.

During a committee stage debate on the Financial Services Bill, she outlined some of the ways she claimed consumers had suffered, such as the payment protection insurance mis-selling.

She added: "Opacity and complexity in the pensions and savings markets result in excessive charges, fuelled by the increasing sub-contracting of investment activity to a lengthy chain of agents.

"Each has access to more information than the consumer, which helps them to maintain charges which deliver generous revenues to them and less real value to the customer."

Labour's Lord Peston said: "What needs to be in here is the equivalent of a duty of care on the part of all financial intermediaries dealing with ordinary consumers and accepting responsibility for what they are offering them."

Liberal Democrat Lord Phillips of Sudbury, formerly BBC Radio 2's Legal Eagle, said: "There are a number of practices at large in big businesses these days that leave the individual consumer way behind in terms of any fairness of dealing."

The Bill tears up the tripartite system of regulation established by Labour with powers shared between the Treasury, the Bank and the Financial Services Authority.

Instead, a new Financial Policy Committee within the Bank of England will be tasked with monitoring systemic risks, while the Bill also creates a Prudential Regulation Authority as a subsidiary of the Bank of England and the FCA, which will have responsibility for consumer protection.