The FSA has attacked banks and large financial services firms for basing their business models around aggressive selling tactics.
Speaking at a conference held by Which? on financial services reform in London this morning, FSA interim managing director of the conduct business unit Margaret Cole rejected claims made by British Bankers’ Association executive director of retail Eric Leenders that many consumers continued to trust high street banks.
Cole said: “I am not in the business of banker bashing, but I do have to say if you look at the evidence unfortunately in relation to payment protection insurance, which has been the most recent saga, it was really the big retail banks who were the major players.”
She said misselling issues have emerged over the last 20 years which have cost consumers £15bn, not including the £9bn cost of PPI misselling.
Cole added although the Financial Conduct Authority will have new powers to intervene where it sees consumer detriment, such as product bans, it is also up to banks to develop a “cultural responsibility” so that the regulator needs to intervene less often in the first place.
She said: “It is particularly striking to me that when we have been doing more business model analysis we see how much of the business models of major institutions are being driven by aggressive product sales. If that remains the business model there is always going to be a high risk of misselling of products.
“We have to be prepared in the new culture of the FCA to be more interventionist to head off those issues before they really get going.”