Financial Conduct Authority chief executive designate Martin Wheatley has admitted the FSA failed to levy sufficient fines for payment protection insurance misselling.
Speaking at an Association of British Insurers conference on conduct regulation in London this week, Wheatley (pictured) said the FSA carried out a lot of detailed work in assessing the scale of PPI misselling but met with strong industry resistance to addressing the problem.
He said: “Where we failed is we did not realise the proportionality of the fines we were implementing against the profitability of the product. We did not look through to the business model of the firm. One or two directors have said subsequently to me and those at the FSA at the time that the FSA should have known firms would not respond to £100,000 fines, as they were making billions from this market.”
Wheatley noted that at some banks, PPI accounted for more than 30 per cent of total retail profits.
Wheatley’s comments come after a Freedom of Information request revealed the FSA has not brought any enforcement cases against individuals for PPI misselling in the past three years, and has no plans to do so.
Wexdon Financial Services 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 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.”