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NAO: FCA lacks evidence on whether it is tackling misselling

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The National Audit Office has found the FCA has no clear way of knowing whether its actions are successful in curbing misselling in financial services.

In a report on regulation and redress, published today, the NAO says while increased fines and compensation have reduced the incentives for firms to missell products, the FCA “lacks good evidence” on whether it is reducing levels of misselling overall.

The NAO has found there are gaps in the FCA’s oversight of misselling, and that the regulator’s complaints data does not identify when alleged misselling took place.

It argues this means the FCA “cannot be sure it has chosen the most cost-effective way of intervening”.

The NAO says banks’ complaint handling has been poor, with no noticeable fall in the complaints referred to the Financial Ombudsman Service that are subsequently upheld. The FOS has found in favour of consumers in 62 per cent of cases since April 2013.

While the FOS is commended with dealing with a huge workload due to missold payment protection insurance, a massive 40,000 complaint cases remain outstanding after two years.

PPI continues to dominate complaints, with £22.5bn paid out in redress to 12 million customers up to November last year. The NAO estimates claims firms received between £3.8bn and £5bn of this compensation.

NAO head Amyas Morse says: “Misselling of financial products remains a major problem for Britain’s consumers.

“The information my staff could see, such as customer complaints, does not show any clear reduction in the extent of misselling.  The FCA cannot be confident that its actions are reducing the overall level of misselling, and it has further to go to show it is achieving value for money.”


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There are 11 comments at the moment, we would love to hear your opinion too.

  1. Why doesn’t the NAO look at the FSCS levies that honest businesses are required to pay to fund the FCA’s constant failure to determine whether they are offering value for money.

    I think we can be reasonably confident that they are not.

  2. Had the NAO carried out a similar audit pre RDR it would have discovered a similar lack of evidence.

    Better late than never I guess

  3. I believe is blatantly apparent, the FCA fail to measure any of its stated objectives, many actions IMHO from the regulator is just a wild stab in the dark, victim, perpetrator, or innocent bystander any one could be on the receiving end and in for a heavy cleaning bill. Its so far behind the game the the wrong doers, have showered, in the bar and on their 4th pint by the time the good ole FCA rovers turn up.

    But wait ! ……. complaints are down by quite a bit is this the evidence we seek ? or is it ……… because the good have been halved, and so tied up in process, bogged down in regulation that they find it hard to get to the end result, where as the bad,corrupt and feckless just keep on its boom time for them even when (or if) the good ole FCA rovers do turn up to play they have long gone and on to the next ! leaving the few to battle on and pay for the bad !

    The only this the FCA can measure with any degree of accuracy is how much it charges the industry and its clients ! that, they are expert on

  4. Section K is a good example of regulatory reporting which provides c**p data at great expense to the consumer. I guess it is used to provide the FCA with evidence (self justification) that Adviser charging is working but frankly where clients are charged hourly as ours are, where the effective hourly rate varies so dramatically as does and the scope of work for each and every the statistics are meaningless. There is no correlation between charge and the advice given. But still the FCA arrogantly say they need this information. If it is downright useless to us, sure as eggs are eggs it is useless for the FCA.
    When they should have proper evidence, the FCA simply do not have it.

  5. But whilst they are working this all out they seem to be letting other matters slip.

    Last November I applied for a variation to change to Ltd company status and when I chased it up a week ago I was told that they’re busy and they had yet to allocate a case officer!

    Because they can’t run their business I am unable to run my business.

  6. The regulators don’t do proactive, they do reactive….many years later.

  7. But how much of that PPI workload relates to recent sales, and how much is historic.

    Also if you play the game, you get cover when it is needed, and then a full refund with interest.

    Then they wonder why so many people complain. Also the FCA probably do not get constant cold calls from CMC’s.

  8. With customers receiving constant cold calls from CMC’s surprise surprise there are lots of PPI complaints.

    The customer also gets the cover needed and a full refund plus interest.

  9. The industrial scale mis-selling of PPI is a perhaps the most shameful example of the FSA having issued guidelines as to how that particular product should be sold and then making virtually no effort to check whether those guidelines were being followed in practice. The banks et al ran amok and, through lack of action, the FSA just stood by and allowed it to happen. What is the use of drawing up a set of procedural guidelines if no effort is made to police those guidelines? That’s fundamental dereliction of duty, is it not?

    And, as ever, what is the use of the RMA Returns if nobody at the FCA ever examines what’s in them? It didn’t even check whether firms selling UCI Schemes had in place appropriate PII cover to do so. Firms can make up any old data to enter on their returns and, provided the totals cross-tally, that’s it for another year. They’re just another pointless imposition on the regulated community that the FCA can’t even be bothered to attempt to justify beyond describing them as “pragmatic”.

    What does the NAO propose doing to tackle the failings it’s discovered? Furrowed brows and a bit of finger-wagging and tut-tutting are all very well but what is the FCA going to be directed to do to put things right?

  10. Regulation will only work on those with ethics. Those without ethics will not be afraid, will not apply the regulation and the real unfair outcome is, those that apply the regulation correctly, are honest and have ethics land up paying.

    The only way regulation will work like any problem is to get under the skin, under the bonnet of the provider, the adviser and the companies. In other words to use the date received and then fiscally visit and inspect those high risk indictors, to understand and to prevent poor outcomes as soon as possible.

    This to my mind is the biggest failing of all regulators, that even when they do identify and visit, we then read years later we have to pay out yet again for a failed product or investment they knew about.

    • Yes but Martin, visits are rarely necessary, unless to interview and even then, people can be summoned to Canary Wharf as Julian has said above they already, the bloody info is in the RMARs we submit, F..k know’s what they do with all this data ? to me, it seems they just sit around waiting for something to happen which in turn prompts a “thematic” review !!! and by this time its as always, far to late.

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