The FSA has warned the Financial Conduct Authority will impose tough enforcement penalties for wrongdoing, in line with this week’s record fine for credit card insurance misselling.
Card Protection Plan was fined £10.5m for “widespread misselling” of credit card insurance between January 2005 and March 2011. CPP has also agreed to pay redress and estimates a further £14.5m will be needed.
Speaking at the Mortgage Business Expo in London yesterday, FSA head of mortgage and general insurance supervision Nausicaa Delfas said the CPP case as indicative of how the FCA will approach matters in the future.
She said: “You may have seen today the fine issued against a GI firm. A certifiable fine of £10.5m, sizeable redress and restrictions placed on their business. This is the type of action we intend to take in the future where things have gone wrong.
“It is not about removing all risk. That would be impossible to do and would not be desirable. The biggest difference you are going to see is the move from what has been essentially a reactive approach to a more forward looking one. We need to be better at spotting risks and acting decisively to deliver better results for consumers.”
Delfas said among the supervisory processes which will be introduced as part of the transition to the FCA, firms can expect to be contacted for a review of the business at least every four years. She said larger firms can expect to be contacted more frequently.
Delfas confirmed that over the course of 2012, five FSA cases have been referred to the police, networks have cancelled seven appointed representative firms and 19 firms left the industry after being contacted by the FSA.
Chadney Bulgin mortgage partner Jonathan Clark says: “the FSA’s stated intention to move to a more pro-active, rather than re-active supervisory role and carry out regular visits to providers should help consumers confidence in our industry. A by-product of this could also be to reduce their reliance on claims companies to gain adequate redress when they have been mis-sold.”