The Financial Ombudsman Service says the FSA was wrong not to set up a collective redress scheme to deal with PPI misselling.
Speaking to the Parliamentary Commission on Banking Standards last week, FOS chief executive Natalie Ceeney said the FSA’s failure to set up a collective redress scheme was an “opportunity missed” with millions still caught up in the “complaints machinery”.
She said: “In our view collective action would have been the right answer on PPI. We now have tens of millions of customers who are in the complaints machinery. It is too late to turn the clock back and proactively compensate customers. It is a bit of an opportunity missed.
“If you know something has gone wrong en masse it feels absolutely right for the regulator to ask for mass compensation.”
An FSA spokesman highlights its consultation on PPI redress from March 2010 where the regulator said it thought “carefully” about a collective scheme but was concerned its powers were “unclear” as the relevant Financial Services Bill was still passing through Parliament.
Jacksons Wealth Management managing director Pete Matthew says: “It would have been a great idea as it would have put these claims chasers out of work. Those who deserve PPI redress would have got more money but instead claims firms are making a killing.”
London & Country head of communications David Hollingworth says: “An industry-wide scheme would have resulted in a less drawn-out affair and may have wiped out a lot of the claims management activity around PPI.”