In the new Financial Services Bill there is a proposal that states the new regulator should ‘have regard’ to the principle that consumers should take responsibility for their decisions.

But the Panel said products are often too complex for consumers to understand, putting them at a disadvantage, and natural human behaviour regarding risk was being “exploited” by firms.  

It also said consumers were unaware how much responsibility they were taking beyond their legal obligation to disclose information.

The panel wants the new Financial Conduct Authority to ensure consumers are confident that firms would act responsibly and treat them fairly and that products and services should do what consumers reasonably expect.

Adam Phillips, chair of the consumer panel, said: “Clearly consumers need to act sensibly when making decisions about financial services.

“However, all too often the products they are being sold are so complex and the risks involved so obscure that it is impossible for them to make reasoned decisions.

“Given the complexity of financial services, knowledge is power. This power currently resides in the hands of firms rather than consumers. It is time to redress the balance, not to load further responsibility onto consumers.”