Financial Conduct Authority does not know if it is protecting consumers from mis-selling in the financial services sector, says National Audit Office report
The Financial Conduct Authority (FCA) is unable show that its actions are effective in reducing mis-selling to consumers, according to a report by the National Audit Office (NAO).
The report, which was released today, discovered that the information the watchdog holds is not suitable for showing a link between its actions and complaints. For example, from the NAO's research, the FCA does not appear collect information on which mis-selling events prompt specific complaints.
The NAO also found that, despite efforts by the FCA to get companies to improve their complaints handling, there had been no noticeable reduction in the number of complaints upheld by the Financial Ombudsman Service over the past five years.
"Legislative restrictions limit my access to information that the FCA holds on firms making it impossible to draw definitive conclusions on its approach," explained Amyas Morse, head of the National Audit Office. "The information my staff could see, such as customer complaints, does not show any clear reduction in the extent of mis-selling.
"The FCA cannot be confident that its actions are reducing the overall level of mis-selling, and it has further to go to show it is achieving value for money."
However, the report did discover that many firms had altered their incentive structures to reduce the risk of mis-selling in light of sanctions issued by the FCA, particularly in relation to sales of Payment Protection Insurance (PPI).
Between April 2013 and October 2015, the FCA, which regulates roughly 70,000 firms across the UK, dished out fines worth almost £300m in relation to mis-selling.
Meanwhile, firms paid out £22.2bn in compensation to customers for mis-sold PPI between April 2011 and November 2015.
An FCA spokesperson said:
"The report makes clear that the recommendations, which we are accepting, are designed to build on the FCA’s current strategy and increase confidence that it is achieving its intended outcomes for consumers. Protecting consumers from the effects of mis-selling is central to what we do."