There are “serious risks” of further mis-selling scandals in the financial industry, MPs have warned.The Public Accounts Committee (PAC) said there has been a recent surge in complaints about “packaged” accounts, where consumers generally pay a monthly fee in return for a bundle of products and services included with a current account. The committee also warned that pension freedoms introduced last year, which give people aged over 55 more choice over how to use their retirement pots, could be a “potential trigger” for future mis-selling on a mass scale.
The PAC warned that more needs to be done to tackle the culture of firms, and highlighted the “failure” of regulation which has led to management companies making up to £5 billion from payment protection (PPI) insurance payouts.”The widespread mis-selling of PPI is a vivid demonstration of the risks facing consumers in the financial services market,” said Meg Hillier, chair of the PAC.”The fall-out is still with us. Many people have waited years for a decision on compensation and, because of the way they have pursued their claims, even then they may not receive the full amount. Serious risks of further mis-selling remain.”The PAC urged regulator the Financial Conduct Authority and the Treasury to take stronger action to find out how much mis-selling is still happening and identify how best to prevent it.
The committee said in a report that more than 12 million consumers were mis-sold PPI and firms have paid over £22 billion in compensation to them since April 2011.