Financial Services Authority (FSA) chairman, Callum McCarthy, has questioned whether the regulator should necessarily take on additional regulatory responsibility in his responses to questions from member of the Treasury Select Committee this morning.
McCarthy today has said it is, for example, “far from clear” the FSA is the best route to regulating consumer credit.
Meanwhile, it is already the case that the way the regulator does its work has changed with some 90% of regulated firms now being smaller ones and no scope to visit them all.
McCarthy has also noted that whatever the level of emotional advertising used by claims management companies (Cmc) it is not necessarily the best course of action to totally ban such people or firms, and that the FSA is not going to be in a position to do anything in any case until statutory powers are granted by the government – if at all.
“I don’t have legal powers to deal with these people,” he says.
McCarthy also says he in not prepared to say consumers should be prohibited from using claims handlers as there may be cases where the alternative is consumers do not seeks redress at all despite there being no evidence claims handlers win more cases than those brought directly by consumers. It is a matter of balancing the actions against the desired outcomes for consumers, McCarthy says.
On the issue of payment protection insurance (PPI) McCarthy says that despite taking some own action the FSA is also looking to the Office of Fair Trade to provide an answer to the question of whether PPI should be “unbundled” from the product to which is attached. Given commission levels of up to 80% it is also the case the FSA is keen to focus on firms systems in place to ensure mis-selling does not take place. Publishing PPI tables may be considered by the FSA as part of its ongoing responsibilities, McCarthy adds.
Responding to criticism from the committee that unbundling could be forced right now by the FSA on products it does regulate McCarthy says it is a matter of balancing its own actions against any other findings or recommendations by the competition authorities on this matter.IFAonline
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