The Financial Conduct Authority (FCA) will use temporary product intervention rules (TPIRs) in cases where a product is in “serious danger” of being mis-sold.
The current regulator, the Financial Services Authority (FSA), has set out its emergency rules to protect consumers under the new regime.
The TPIRs will allow the FCA to take action, including restricting the use of certain product features and requiring that a product not be promoted to some or all types of customers.
In the most serious cases, the regulator will be able to use the rules to prevent a product being sold altogether, such as in instances where complex or niche products are being sold to the mass market.
The rules will be made before consultation and will last for no longer than 12 months.
During this time the FCA will either consult on a permanent remedy or will work to find another way to resolve the problem.
Martin Wheatley, chief executive designate of the chief executive, said: “The creation of the FCA is our opportunity to reset conduct standards. This power, along with our other new powers, helps define how we will regulate going forward.
“We know that some in the industry are concerned about us using this power too hastily; I want to be clear that we know proportionate judgement is needed, and that is what we will exercise.”
Wheatley explained that while its powers will not be used frequently, the FCA will not hesitate to use them where it has serious concerns.
The rule-making power has been introduced as part of the FCA’s regulatory resources by the Financial Services Act 2012.
It follows a period of consultation which closed on 4 February this year.
By Ellie Duncan