'Pension reforms won't be the next PPI'
The outgoing boss of the FCA, Tracey McDermott, has assured MPs that lessons have been learned from the Payment Protection Insurance (PPI) scandal.
She was confident that pension reforms, which allow people to have more freedom over their savings, would not lead to mis-selling on a similar scale.
The big fines imposed on banks, £22,5bn so far, were the best incentive to stop wrongdoing she said.
Like other regulators she was concerned about the £5bn made by PPI claim firms.
MPs on the Public Accounts Committee started their inquiry into how the financial community has handled "mis-selling, regulation and redress" by asking the outgoing chief executive of the Financial Conduct Authority, Tracey McDermott, about their handling of the Payment Protection Insurance (PPI) scandal.
The most recent figures from the National Audit Office show that from the beginning of 2011 to the end of December 2015 a total of £22.5bn has been paid out in PPI compensation.
Around £5bn of that money has been paid to firms handling the claims on behalf of claimants.
Ms McDermott said she too was surprised by the amount earned by these companies but that a lot of people had chosen to go with them rather than deal with the claims themselves. People, she said, were not confident the banks would deal with their complaints.
Paperwork showing PPI charges was not always easy to locate and these firms did the searches.
When asked why her organisation had not forced banks to write to all their customers who had been mis-sold PPI, she said, that was not practical.
"We had to ensure people who had been mis-sold got the compensation ..we had to encourage the right people to claim."
Ms McDermott said the government were consulting on whether there should be a cut off date for PPI claims.
She said a two year deadline - which would mean anyone entitled to claim would have to do so before 2018 - would help bring closure for customers and banks.
Asked by MPs if another similar mis-selling scandal might happen again she said her organisation had tried to reduce the level of risk but that it could not be completely stamped out.
"Fundamentally there will always be a risk that there will be some mis-selling in any product that involves advice and sales."
"But what we are trying to do is ensure that is at a level that is minimised."
Asked if there were sufficient safeguards to stop mis-selling under the new pension reforms - which allow people to have more freedom over the pension savings - she said the FCA would be looking out for new products and making sure consumers understood the risks involved.
She said the regulator had restricted the sale of complex financial products and that it also had the "nuclear option" of banning products altogether.
The new chief executive of the FCA, Andrew Bailey, currently the deputy governor for Prudential Regulation at the Bank of England and chief executive of the Prudential Regulation Authority., takes over in July 2016.