The Retail Conduct Risk Outlook analyses external factors in the economy, pressures on different firms and how they might impact consumers.

Consumers were found to be struggling with the effects of as slower economy, low interest rates and poor returns on investments.

As a result, one of the major risks concerning the FSA is the risk of being sold unsuitable products. This covers products which are too risky for them, which they do not understand or which do not meet their individual circumstances.

The 15 major risks identified were:

• Aligning business models to the fair treatment of customers
• Complexity in retail investment products and services
• Firms’ response to regulatory and/or legislative change
• General insurance
• Governance of funds in life offices
• Host authorised corporate directors
• Inadequate complaints handling
• Investment propositons
• Investment risk profiling
• Investor compensation protection
• Mortgages
• Pensions and retirement planning
• Product bundling
• Projections
• Systems and control weaknesses in the network model

These were then further classified into current issues, emerging risks and potential concerns.

The FSA said it was no longer so concerned by structured deposits, UCITS IV and tax changes and their implications for financial products.

Martin Wheatley, FSA managing director, said: “It is clear the financial services industry - firms and regulator- have a lot of work to do. Our analysis means we can focus our work on the most significant risks facing consumers. It also helps firms understand how to avoid the bear traps of designing products for maximum profits but little benefit for consumers.”

The risks identified will be used to help firms over the next 12-18 months. The FSA hopes early intervention will prevent any mis-selling scandals.

The report can be viewed here