Mis-selling of financial services and products takes many forms and can cause serious harm to consumers. Mis-selling happens for several reasons: products are complex and difficult to understand for even very knowledgeable consumers, and the culture and incentives within firms can make mis-selling more likely. Over 12 million consumers were mis-sold payment protection insurance (PPI), and firms have paid over £22 billion in compensation to them since April 2011. The Financial Conduct Authority (FCA), as lead regulator of financial services firms’ conduct, plays a key role in preventing and detecting mis-selling, and in responding to it when it happens, including arranging for redress for affected customers. The Financial Ombudsman Service (the Ombudsman) also plays a role in redress, by resolving disputes between individual consumers and firms. In recent years, claims management companies, which are currently regulated by the Ministry of Justice, have submitted most consumer complaints to the Ombudsman. HM Treasury is responsible for designing the regulation and redress framework for financial services.
11 May 2016