Martin Wheatley, chief executive of the Financial Conduct Authority, has defended the regulator’s handling of mis-sold interest rate hedging products, stating it is now a matter for the courts to determine discrepancies between the FCA’s and the claimants’ view.
At the FCA’s annual meeting, Jeremy Roe, director of Ordinary People in Business, asked a number of questions on behalf of the Bully-Banks campaign about IRHP products.
Mr Roe asked what is the adequate value of the fines levied on the banks in IRHP products; how many sales personnel have had their status removed as approved persons; how many have been prosecuted.
He added: “Nobody has bothered to pick up the phone to talk to us about what evidence we’ve gathered.”
In response to his questions, Mr Wheatley said: “There have been no fines and no individuals have lost their licences as a result of this process.
“The difference between us [in opinion] is such that it is being tested in the courts - there are active court cases at present. Court is the most appropriate place to determine whether your view on my view is correct.”
Mr Roe responded, however, that it costs at least £1m to bring an action to court.
In 2012, the Financial Services Authority identified failings in the way that some banks sold interest rate hedging products - derivatives which are separate to a lending arrangement and are for the purpose of managing interest rate fluctuations.
In January this year, the FCA revealed that 11,000 consumers had received redress payments of £1.8bn, including more than £365m to cover consequential losses, from banks in the interest rate hedging product review scheme.
At that time, the banks had sent 17,000 basic redress determinations to customers, 14,000 of which include a cash redress offer, and 3,000 confirmed that the IRHP sale complied with the regulator’s rules, or that the customer suffered no loss.
Elsewhere, Michael Mason-Williams asked from the floor whether the FCA expects shareholders to pick up fines for Lloyds Bank because the board of directors “have refused to act within principles”.
Mr Mason-Williams posed the questions: “Are you the worst joke that has ever happened to the financial services sector in the UK?”
Mr Wheatley responded that there a need for evidence that the FCA does listen to information. He added that the FCA is secretive because it has to, in order to protect individuals.
At the start of the meeting, Mr Wheatley also said the Retail Distribution Review has not solved all the problems it was designed to fix and more work needs to be done in this area.