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FoI reveals lack of accountability over PPI misselling

FSA

The FSA has not brought any enforcement cases against individuals for the misselling of payment protection insurance in the last three years and says it has no plans to do so.

London-based IFA Wexdon Financial Services submitted a Freedom of Information request to the regulator to find out whether individuals have been held to account over the recent PPI misselling scandal which could cost the industry around £10bn in compensation.

In the regulator’s response, seen by Money Marketing, the FSA says: “No FSA regulated persons have been disciplined by the FSA for PPI misselling over the past three years. There are no cases currently being formulated against FSA regulated persons for disciplinary proceedings for PPI missellng.”

Wexdon’s own analysis of FSA final notices between 2009 and 2012 found just one enforcement case against an individual connected to PPI misselling, but this related to compliance oversight failings rather than unsuitable sales.

In June 2010, the FSA fined David Head, director at IFA network FT Compliance Services, £10,500 for failing to ensure systems and controls were in place to ensure suitable recommendations of PPI.

Wexdon founder and IFA Richard Briggs, who submitted the FoI, says: “Banks have put aside billions for compensating customers who were missold PPI, but the FSA has done nothing to bring those culpable persons in the industry to account.

“The public are entitled to expect that a regulator will act efficiently and effectively to maintain standards, and root out and penalise unacceptable behaviour, to maintain the integrity of the market. The FSA was asleep at the wheel when the misselling occurred and it seems it is still asleep when it comes to effective regulation.”

An FSA spokesman says: “To bring a case against an individual there needs to be strong evidence about that individual’s culpability.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. More lack of surprise from the world of “you could not make it up” that is UK regulation.

  2. It appears that you are immune from prosecution or regulatory enforcement if you work for a bank. I wonder if the huge bonuses paid to bank big wigs who profited from PPI sales will be clawed-back now that compensation is being paid. If only the general public were aware of what goes on in the Financial Services industry. Perhaps we should run an ‘Honesty and Disclosure’ campaign and get the regulator to pay for it!

  3. Why am I not surprised?

    IFA firms are easy targets whereas large banks with battalions of lawyers and a pyramidic management structure will always prove more difficult to pin down.

    If the new FSA under Iron Man Wheatley wants to wash away some of the shame of the past 12 years then sorting out the banks and their management would be a good start.

  4. An FSA spokesman says: “To bring a case against an individual there needs to be strong evidence about that individual’s culpability.”

    In light of the massive scale of the PPI mis-selling scandal, this seems to be a decidedly unconvincing statement. Tens, perhaps hundreds of thousands of these policies have been sold inappropriately yet the FSA claims not be able to obtain sufficient evidence to identify a single individual responsible? It doesn’t quite ring true, does it? The evidence is surely there, the issue is that the FSA has failed to dig for it (or shirked its responsibility for so doing).

    The front line sales people who mis-sold all these inappropriate policies didn’t do so on their own initiatives, did they? Somebody higher up the ladder was directing them to do so on a targetted basis, under pain of sanction if they didn’t. This we know because of the wealth of anecdotal evidence posted on various forums by people who’ve actually worked in such environments.

    You can bet your boots that if an IFA firm had systematically mis-sold just about anything, the FSA wouldn’t hesitate to apply whatever resources were needed to identify exactly which individuals were responsible, resulting in public censure, a fine and/or a ban from holding any position of authority for an extended period. That’s the way it works, isn’t it? But apparently not with the banks.

  5. So, the bank’s salesmen make a tidy ‘profit’ and the bank itself makes shedloads of money (nice for all the CEOs and higher management). When the regulator finds out what has been going on (about a decade after everyone else knew), they fine the offending banks (which pass on the cost of the fines to their customers). The fines are then used to fund the FSA’s bonuses whilst the FSCS wacks IFAs with additional levies.

    It’s enough to make you weep !

  6. I am looking for the original article and FOI itself and I’ve read though their blog (presumably this is it – http://wexdon.com/blog ) but can’t find it there. Where is the original FOI?

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