Payment protection insurance had cost UK banks more than £34 billion, £22 billion of which banks have paid back to consumers. As the FCA attempts to draw a line for PPI claims by 2018, analysts warn that the government’s new pensions scandal might give rise to the next payment protection insurance scandal.
Pensions fraud had victimised hundreds of UK retirees from 55 years old above to giving up their withdrawn pensions through a fake phone call. The phone call aims to know about the retiree’s bank account.
The FCA recognises the issue. Outgoing Interim Chief Executive Tracey McDermott said:
“We haven’t actually seen an enormous amount of innovation in new products yet, but obviously we expect that there will be and that it will be good generally for consumers,” McDermott told the Public Accounts Committee in Britain’s parliament.
“We have been very focused, and indeed the industry is very focused, on the fact that this cannot become another mis-selling scandal.”
The FCA is in question after it junked three bank industry probes that would help review the UK bank and finance culture. Many believe it was the key to tackle possible future financial scandals. Asked for a solution to mis-selling, McDermott said:
“Fundamentally, there will always be a risk that there will be mis-selling in any product that involves advice and sales. Mistakes will be made. What we are trying to make sure is that it’s at a level that is minimised,” McDermott said.
“We have not washed our hands of this issue,” she said regarding culture.