Financial regulator - Penalties must be seen to be severe

THE appointment of a new watchdog to crack down on banks and insurance firms that mislead customers over the risks of investing in money-making schemes should be warmly welcomed.

Legislation, due to come into force next month, will empower a single financial regulator to take action on behalf of consumers against insurance companies, banks, and other financial institutions that are misleading customers.

There has been a considerable amount of public concern that consumers are being deliberately deceived by representatives of financial institutions, especially when it involves informing customers about the real financial risks that they may be facing. Endowment policies and pension funds are areas that have attracted most attention in recent months, especially those that have been affected by fluctuations in the stock market.