Few could disagree that consumers need a louder voice and a more muscular champion when battling the sharp practice of the financial services industry. One such voice was meant to come from the Financial Services Consumer Panel, whose chairman, Lord Lipsey, resigned yesterday after a row, only six months into the job.

The battle lines were simple. Lord Lipsey wanted to go on to the front foot, beefing up his team in order to challenge the industry more forcefully and lobby more widely on behalf of consumers. His colleagues did not. Exit Lord Lipsey.

The panel has done some good, quiet work in forcing the Financial Services Authority to take its consumer protection responsibilities more seriously. It championed the use of “mystery shoppers” to find out how financial products were really sold in this country, rather than how the industry claims they are sold. It has pushed the FSA into curbing the more outrageously mendacious of advertising claims.

But progress has been timid and slow. FSA fines for anticonsumer behaviour have been much too small to act as a serious deterrent. Naming and shaming of rogue companies has been rare; performance league tables have yet to see the light of day. Anecdotally, the treatment of customers does not seem to be getting any better.

The FSA’s other duties do not sit easily with consumer protection. Indeed, maintaining financial stability and the strength of banks and insurers often leads to very contradictory policymaking. The FSA sometimes manages to sound like a trade association, so anxious is it to ensure confidence in a badly bruised system. Senior officials are too concerned about preventing banks and insurers from failing to worry too much about their customers.

So long as its budget is met by fees levied on the industry, it is hard to see the FSA allocating serious money to the panel, which got by on only £378,000 and two full-timers last year. That compares with 2,000 staff in the FSA.

Which?, formerly the Consumers’ Association, makes a brave stab at battling on behalf of consumers but is thinly spread. Consumer Focus, formerly the National Consumer Council, is near invisible. Financial consumers still desperately need a strong voice.

Bizarrely, the mantle has for now been taken up by Lord Mandelson, the Business Secretary, who tore into credit card providers this week with a ferocity and zeal never seen in the FSA.

Times Recommends

• Gazprom brands Ukraine 'a barbarian' in gas row
• Services sector raises fears over UK jobless
• Retailers surge as profits survive sales plunge