NAO to publish mis-selling investigation findings

NAO to publish mis-selling investigation findings

The National Audit Office is set to publish a report into how the Financial Conduct Authority, Financial Ombudsman Service and Financial Services Compensation Scheme deal with claims of financial mis-selling, by the end of this month.

The independent body is looking at the way these authorities work together to identify mis-selling risks and secure potential redress for consumers.

Specifically, it is investigating how the FCA regulates financial services institutions to counter mis-selling and whether it provides the right incentives to deter such activity.

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FCA board minutes revealed that the NAO held discussions with its advisory panels as part of the review.

A spokesperson for the NAO confirmed its report is due for release by the end of the month.

Depending on its results, further investigations could come from the government’s Public Accounts Committee.

The NAO’s original statement regarding the investigation explained that mis-selling has occurred across many different product areas, including bank accounts, consumer loans and insurance.

It pointed out that financial services firms have paid more than £18bn in compensation to purchasers of payment protection insurance following regulatory action, with the Financial Services Authority stating “stronger action sooner could have limited the growth of the problem”.

Malcolm Coury, managing director of Money Wise Independent Financial Advisers, responded that the Fos’ most recent annual report for 2014/15 found only 1 per cent of complaints were about IFAs and it found in the consumer’s favour in just 39 per cent of those cases.

“This presents a very strong argument for the regulation and supervision of the independent advice sector to move away from the FCA/Fos to a new or existing professional body like the PFS or IFP.

“There seems to be little logic in continuing to regulate and supervise the independent advice sector within financial services in the same way as the product manufacturers, i.e. the large banks, loan and insurance companies.”

Greg Heath, managing director at Derbyshire Booth Financial Management, added that the authorities appear to start from the point of view that the industry/product/service is guilty of something and that the accusing party has been wronged.

“In no other area of law be it commercial or common would that be allowed. They are all a nonsense and an insult to British justice formed over the centuries.”