Money from fines imposed by the FCA should be paid to regulated firms, the regulator has been told.

And regulatory chiefs have also been urged to act more quickly and decisively when complaints are raised.

The messages come from trade body APFA, which has written to the FCA regarding its mission statement.

Redistributing the cash from regulatory penalties would ultimately benefit consumers, APFA claimed.

The letter to the FCA read: “We think it is only fair that the proceeds of any fines imposed by the FCA should not be ring-fenced for HM Treasury, but instead be repaid to the regulated firms – the vast majority of which are well-run and provide a good service – who pay for the actions of a few rogue firms. These savings would then be passed on to consumers.”

The FCA consultation asked what it should consider when deciding whether to intervene.

APFA responded: “The FCA must be more decisive when it comes to taking action when there appears to be a systemic problem with a product or firm.

“This should include conducting an investigation as soon as possible in response to credible concerns or complaints from firms or individuals.

“Our members often tell us that they will take concerns to the FCA only for the FCA to be slow in acting upon these concerns or acknowledging that there is a problem.

“We do not believe there is a fundamental problem within the sphere of financial services that could not be addressed. The FCA has the ultimate sanction of banning a product, individual or firm. If any of these is consistently causing harm to consumers this sanction must be used.”

APFA urged the FCA to produce and publish clearer metrics on its performance, including using the level of FSCS levies and the number of upheld FOS cases as a measure of success and an indication of the need for the FCA to take supervisory or enforcement action.

The trade body also suggested regulators must rethink how they approach consumer responsibility – saying that currently there are mixed messages.

It said: “On one hand, the consumer is considered to be capable of understanding the information presented and the risks and opportunities involved in undertaking a particular financial decision.

“On the other hand, the consumer is sometimes implied to be credulous and naïve and unable to react in a rational manner to specific events or information, and they should be actively prevented from undertaking from certain risky activities, or aggressively encouraged to undertake activities which are viewed as being beneficial.

“Greater clarity and consistency in respect of the target consumer (not withstanding that some consumers will be vulnerable) and their responsibility would help firms understand what is expected of them and the behaviour and responsibility they can expect a consumer to bear.”