Financial Conduct Authority chief executive Martin Wheatley has rejected concerns that the redress bill related to misselling scandals such as payment protection insurance is too high.
Speaking at the Lansons Communications Future of Financial Services conference in London last week, Wheatley alluded to industry concerns over the level of redress firms are having to pay for past mistakes, mainly referring to the approximate £10bn total redress bill paid out for PPI misselling to date.
Wheatley said: “With the painful redress programme many firms are having to go through there is a concern that the cost to the industry of putting right the wrongs is too high. It is not our belief that a market that works well is one that is not profitable.
“But at the same time we have to deal with the problems of the past and we have to clear up the legacy mess. A market that works well should work well for all. It is profits for the good firms and exits for the bad firms, innovation and choice for consumers, and hopefully good products that meet consumers’ needs and not bad products that simply obscure costs or risks embedded in the product.”
Wheatley said “add-on” products such as PPI and interest rate swaps are often “monopolies at the point of sale” and create an “assumptive sales process” the regulator is concerned about.
Highclere Financial Services partner Alan Lakey says: “Anyone who has been given bad advice, such as with PPI, should be compensated. But the industry is being expected to dig itself out of a hole that the regulator helped to create by not intervening soon enough.”