British Bankers’ Association chief executive Anthony Browne (pictured) says banks are “frightened” of developing new products because of regulatory uncertainty.
In a warning to the incoming Financial Conduct Authority, Browne says “regulatory over-reaction” risks restricting access to markets to the detriment of consumers.
Speaking to Money Marketing, he says: “If the banking system is under the cosh so much that it is frightened to develop new products or sell existing products then it is not a healthy financial system.”
He points to interest-only mortgages as an example of where banks have withdrawn their offering because of fears over future misselling claims.
He says: “Banks have been stung by the enormous bill from payment protection insurance misselling and the perceived retrospective change of the rules. The public figures are around £12bn but it is rising all the time.
“If banks pull out of interest-only or other products because of uncertainty then it is ultimately bad for consumer choice. The FCA needs to focus not just on controlling risk but ensuring access to market products too.
“Our appeal is for the regulator to bring absolute clarity around what banks can and cannot do. There is also a lack of clarity around caveat emptor and the rights and responsibilities of customers.”
John Charcol senior technical director Ray Boulger says: “I certainly subscribe to this view. It is important that the regulator deals with macroprudential regulation and does not get involved in the minutiae of the details.”
Click here to read Money Marketing’s full interview with Anthony Browne