Turner admits FSA has been ‘ineffective’
Lord Turner admits FSA’s conduct regulation failed to intervene early enough to prevent such scandals as the PPI debacle.
By Simoney Girard |
Giving his last chairman’s comment in the FSA’s final report and accounts before it splits into the Financial Conduct Authority and the Prudential Regulation Authority next year, Lord Turner said: “Last year, following a legal challenge by the industry, the FSA won a crucial victory to ensure people who were mis-sold PPI would receive redress where due.
“Today, firms are addressing complaints and have begun contacting people who may have been mis-sold a policy but never complained.”
Latest estimates put redress paid since January 2011 at about £3.5bn.
However, Lord Turner said: “The scale of customer detriment and ever-growing compensation bill sadly suggest that PPI is another chapter in the sustained litany of mis-selling scandals, which have eroded customer trust in UK retail financial services.
“They also illustrate the ineffectiveness of the FSA’s past approach to conduct regulation, which failed to intervene early enough, or far enough up the product development and marketing chain, to address problems before they produced major customer detriment.”
He said that, in response, therefore, and as described in the FSA’s 140-page report, the regulator is reforming its approach to conduct supervision as radically as on the prudential side, and the processes, skills and resources of the FCA are being designed to ensure a more effective approach in future.
Mr Turner added: “These conduct challenges are very considerable, as our work over the last year continues to illustrate.
“A new more effective supervisory approach to ‘early intervention’ will always need to be supported, however, by the credible deterrence of potential enforcement action
“In this area too, the future authorities will build on major changes in the FSA’s approach, implemented over the last five years and, as this report describes, maintained over the last year.”