PPI Scandal: New Watchdog Will Ban Risky Products
The head of a new City watchdog has pledged to ban risky financial products and enforce tougher penalties as regulators learn from costly mistakes of the past.
Martin Wheatley, who is due to lead the incoming Financial Conduct Authority (FCA), outlined the plans ahead of its launch early next year.
The body will replace some of the functionality at the Financial Services Authority (FSA) which is being wound down in the wake of the financial crisis and a number of mis-selling scandals.
Mr Wheatley said the FCA would take "bold, firm" action and "will have a greater appetite to get things done".
Its mission document titled "Journey to the FCA" was intended to warn against misconduct rather than discourage business, he insisted.
"A key new power will mean that we can step in and ban the sale of products that pose unacceptable risks to consumers for up to 12 months, without consulting first. We will also be able to ban misleading advertising", he said.
Mr Wheatley said it would also make supervisory judgements about a firm's business model and forward-looking strategy and intervene if it sees unacceptable risks to the fair treatment of customers.
He saw the FCA, which will focus on protecting consumers from dodgy practices, as a break from the past.
The financial services industry has been dogged in recent years by the payment protection insurance (PPI) and interest-rate swap scandals.
The demise of the FSA will see a total of three new bodies created to regulate financial services.
The Financial Policy Committee will have responsibility for monitoring the risks of the financial sector, while the Prudential Regulation Authority (PRA) will take over responsibility for supervising the safety of individual financial firms.