The Public Accounts Committee expressed its disappointment and recommendations to the Financial Conduct Authority, the Treasury, the Ministry of Justice and the Financial Ombudsman, regarding its failure to prevent and contain the payment protection insurance scandal.
The £32 billion scandal had cost the UK banks more than half a year’s profit. It had effectively tarnished its consumer relations and it is indirectly affecting the UK economy’s recovery.
The PAC said the FCA and FOS had taken “some action” that it deems is not enough. The PAC noted the FCA’s effort to tackle the cultural problems inside the banking industry, specifically the aggressive sales culture. But it said it isn’t enough.
It recommended that the FOS create a timetable and a report on its progress regarding its backlog of PPI claims. The PAC said this has been excruciating for consumers waiting for more than two years for a decision.
The PAC criticised the Treasury for being uncertain of the FCA’s efficacy in dealing with the mis-sold PPI scandal. It also failed to establish a “good-bad” tier that would reflect the current level of mis-selling in the country.
“It is vital the government and regulators take fresh action now to better protect taxpayers’ interests, both in reducing the potential for mis-selling and, when it does occur, to ensure those affected get their due compensation,” said PAC Chair Meg Hiller.