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.”