/ Money

Will the new financial regulator succeed? You’ll be the judge

Female hold yes and no cards

We’ve invited Martin Wheatley, the CEO designate of the new Financial Conduct Authority (FCA), to share his insight on the soon to be financial watchdog. He’s asked for the FCA to be judged on its results.

We are in the process of finding out from you exactly how things can be improved with the new financial regulator.

At its recent consumer debate, Which? invited me to hear about the types of concerns people have – whether it is with their bank account, or when they are trying to get a mortgage or sort our an isa.

A couple of key themes kept coming up: you want a system that ensures banks, insurers and advisers work in your best interests and that the products you buy are right for your particular needs.

It is something we are very conscious of, and at the centre of all of this change is delivering a fair deal for you, the customer. For me this means three things.

Changing how banks treat you

Whilst a good number of companies put their customers at the heart of what they do, we need to get more firms putting you first. That means more banks, more advisers, more mortgage lenders realising that dealing well with customers and delivering a good service is ultimately good for business. This also involves being clear and fair with you.

I was pleasantly surprised to find out, via a straw poll at the Which? debate, that about half of the audience said they did indeed read all the information they received on a financial purchase – opening a new account or buying an insurance policy, for example.

I suspect this may not be the case for everyone and I am keen to improve the way products are designed, sold and explained to you.

Changing how we work

The FCA is being set up with new powers to protect your finances. We will be tougher and more willing to act when we think you may not be being treated fairly.

The FCA will be focused on what your experiences are when opening a bank account, taking out a mortgage or making a complaint.

We will be out testing what’s happening on the ground, both at the point at which you deal with your bank or building society but also when products are being designed. Going forward, if problems arise we want to stop them before they harm you.

FCA turns over new listening leaf

I will ensure this change, and events like this are an example of what we want to be doing more of in the future.

I came away from the event in no uncertain terms that issues such as bank charges, improved trust in the companies you use and too much small print on the contracts you sign should be high on the FCA’s list of priorities.

If you could put me in your shoes for the day what would you want me to take on board? We want to continue hearing your views.

The FCA wants to act sooner to fix problems and aims to ensure you get a fairer deal. But as I said, you will be the judge of that.

Which? Conversation provides guest spots to external contributors. This is from Martin Wheatley, the head of the new Financial Conduct Authority – all opinions expressed here are their own, and not that of Which?

Do you read the T&Cs that come with a financial purchase?

I scan read and hope for the best (56%, 91 Votes)

No, never, they’re too complicated (17%, 27 Votes)

I expect my bank to highlight any crucial bits (14%, 22 Votes)

Yes, I love a good read (14%, 22 Votes)

Total Voters: 163

Loading ... Loading ...
Comments
Guest
Disappointed in FOS says:
14 March 2012

After close to 40 years with the local branch of High Street bank, in 2007 we were approached by them, when depositing money, to take their financial advice. We took this advice from someone in the bank who we had known personally and trusted for 20 years. Being inexperienced in such things we took this advice believing this person was acting in our best interests. We realised later we had been mis sold. Our complaint to the bank was dismissed out of hand. Our subsequent complaint to the Financial Ombudsman Service dragged on for years and we are currently being forced into accepting their recommendation, which from our point of view is unsatisfactory as it only dissolves part of our investment which, if properly advised, we would not have entered into. During the FOS process breaches of code by the bank were discovered. Their poor and inaccurate record keeping was exposed. Their inability to confirm the dates of meetings and their insistence on dates of meetings, which we proved were wrong, were all ignored. The contradictory information provided by the bank, information sent to us after we undertook to enter into the investment, which should have been sent before we did so, have all been considered not relevant by the FOS although they themselves uncovered some of this information. None of these circumstances were taken into account and the FOS just seemed to focus on the risk element of the investments, not on the banks inaccurate record keeping and late provision of information. The FOS seemed to think these errors of fact not important. The Bank has got away with poor advice which was not in our best interests but seemingly for the benefit of the bank and their employees. We believe they were motivated by generation of their own fees. We have felt that it has been an uphill battle and the FOS have been tardy and have been, seemingly, biased towards the bank by refusing our request to pursue the anomalies; we have felt despondent and close to giving up. The new proposals regarding FCA, hopefully, will be an improvement on what we have now, particularly if it extends to the way banks offer and administer investment advice to inexperienced and vulnerable customers.

Guest

Some questions if you please Martin.
– In light of the FSA admitting in their report into the £45 Billion bailout of RBS, that “risk based assessment (ie, the Hampton principles)” were “flawed” and completely failed to regulate – will the FCA be using these same Hampton principles and risk based assessments to regulate?
If the FCA will continue to be governed by these same flawed principles of regulation, then how on earth do you propose the FCA to be any different from the toothless FSA?
The “needs of the business” gets far too much consideration and ties regulator’s hands. The needs of the consumer MUST be put first, that is what we are paying record amounts of taxes for!

– Will the FCA now be working with the OFT in bringing a legal case against banks for their charges?
Unenforceable charges under common law in England and Wales, as no bank charge has been presented before a court with an accurate breakdown of actual cost incurred, I fail to see how the regulators and enforcement bodies can justify complete non action, whilst at the same time telling the public they are standing up for them.
The FCA should stop leaving it to the individual and act.

– “we need to get more firms putting you first” – please stop with the spin.
If businesses were not shaping regulation, for their own benefit, we would not be paying with the cuts we are facing today and for the forseeable future.
Regulators across the board exist to protect consumers, not “advise businesses how to comply with the law”

– “The FCA is being set up with new powers to protect your finances. We will be tougher and more willing to act when we think you may not be being treated fairly”
The key term there is “when WE think you may not be being treated fairly”
As we have experienced with the FSA and FOS, what they think is fair doesn’t tally in anyway with what’s happening in the real world.
If you are working within the same rules on regulation, then you will be bound by the same hampton principles that state you have to consider whether or not any action you propose wll be detrimental to businesses, if it is, you cannot legally enforce it.
Will you have any requirements for deeming something is unfair?
Will you take notice of individual complaints or will, as we do now, have to see thousands of identical complaints before you will even look at the issue?

– “We will be out testing what’s happening on the ground, both at the point at which you deal with your bank or building society but also when products are being designed. Going forward, if problems arise we want to stop them before they harm you”

What you don’t say there is that under the hampton principles no regulator or enforcement body is permitted to inspect without good reason.
As is the case now, generating a “good reason to inspect” is damned near impossible with a business that has a “compliant status” with the FSA, which is the majority of businesses.

I echo what “disappointed” has posted.
The FOS are incompetant at best, they are unanswerable, not in anyway transparent and self believing that they are above the law.
To quote an example of my experience of taking a case to them;
Mis-sold PPI by a company that “works alongside and audits on behalf of the FSA”
FOS agreed and stated in writing that the consumer was misled at the point of sale.
FOS then ruled in favour of the business because it was “not convinced the customer would not have bought the policy, had they been accurately informed at the point of sale”

Of course this was a complete fudge – had they ruled against a recognised FSA policy training company it would have adversely effected the “needs of the business” and it would not have been able to enforce its ruling. It confirmed that this was considered as it stated in it’s final ruling that “regulation must be considered alongside the facts of the case presented”
So much for fact based complaints which the FOS dragged on for almost 3 years!

I don’t hold out much hope for any new regulator or enforcement body to do anything to help real people.
Business has too much influence (writing training modules for some enforcement bodies!) – any action has business needs considered first regardless of consumer complaint (hampton principles) – the same people are employed at regulators (are the FCA and FSA not the same staff?)

Until the way regulators work is changed and the farce of risk based assessment (hampton principles) is removed, things will go on as they have been in recent years.
Those running regulators will remain out of touch when it comes to helping the majority of the public.
How many people that actually pay bank charges or have been mis sold a PPI policy will work on the board of the FCA? Not many I bet….

Guest
Suspicious says:
14 March 2012

My question is of a more simple nature; How many times do financial services have to be caught with their hands in the till before any regulator actually takes meaningful action? I refer to pensions mis-selling, ppi mis-selling, endowment mis-selling, investment mis-selling et all.

The recent episode of politicians being too close to some in the newspaper industry is echoed in financial services. Too much “you scratch my back and I’ll look the other way” going on. So come Martin, lets see what you’re made off.

Guest
JANE DAVIES says:
14 March 2012

Will the FCA be overseeing 2nd charge mortgages? The current system of 1st charge loans being with the FSA and 2nd charge with the OFT is a cause of great detriment to 2nd charge borrowers. The OFT cannot order redress when consumers have been unfairly treated. Consumers in this market continue to be treated poorly.

Guest

HSBC has charged my disabled wife who has a brain injury and cognitive impairment £640 in bank charges over about 14 months – equivalent to 13 weeks of her pension. The local HSBC branch has refused to refund despite the support of a letter from her neuropsychologist explaining the nature of her cognitive problems. The charges arise from her account becoming overdrawn due to her cognitive disability, despite the local branch being well aware of her condition and having previously agreed not to give her an overdraft and not to allow her to become overdrawn. I’ve written to HSBC’s Southampton address and after 3 weeks had a letter from someone in Leeds saying she was the retail manager for the local branch and that the decision was correct and that no refund should be made.

The HSBC Leeds person also confirmed the recommendation by the local branch that my wife should open an account with set charges of £15 per month to avoid other bank charges. Under this proposal my wife would be paying about 7% of her monthly pension income in bank charges – and HSBC thinks this is a good idea – for who? I thought it was deeply offensive.

I was shocked by this completely unsympathetic decision and the bank account recommendation that appeared to take no account of my wife’s condition nor the letter from her neuropsychologist. So I phoned the HSBC number given which was answered by someone in Hamilton near Glasgow. I have politely but forcefully made her aware that I was most unhappy with the decision and believe the bank is guilty of disabled discrimination. I have stated that if HSBC cannot resolve the matter to our satisfaction, then I shall complain to the FSA; Equality and Human Rights Commission; Headway the brain injury association and raise it in the media. I have also assured them that I will remove my personal and business accounts and investments from the HSBC to a more sympathetic understanding bank. This is despite having had my personal account with the HSBC and Midland Bank for over 40 year as has my sister and also my parents before me.

I really do think HSBC is guilty of truly morally abhorrent behaviour and cannot see any reason to have a local branch, when you end up dealing with remote offices/call centres all over the UK! Life is harder enough for my wife and myself as her family carer without having to cope with this.

Would welcome any feedback, including suggestions of a more sympathetic branch. Currently I’m thinking of a Cashwise account with the Coop Bank – no cheque book but should meet all her other needs without risk of punitive charges.

Guest
Dougal says:
8 May 2012

All I would like to add is that HSBC need to be very careful. There are moves afoot regarding Bank Charges – I regret I cannot say more than this at this stage for very personal reasons.
My advice : Keep watching the News over the coming months……..

Guest
l williams says:
15 March 2012

I visited my bank branch on 2nd march, and agreed a fixed rate bond. When the certificate arrived, it showed that the bond wd not come into effect untill 19th march??? Losing 2 weeks interest. Is this correct?

Guest
Robert Shaw says:
15 March 2012

Another bureaucratic nightmare!

Guest
B Wilkinson says:
15 March 2012

I must say that, although not having much money is not a good thing, at least it means that you are not bothered by crooks called ‘financial consultants’ or ‘investment managers’, all of whom are just trying to take it off you. If I had any money, I would buy myself a nice house, somewhere warm, and keep whatever money I had in a safe somewhere. The stories I read about how banks treat their long-standing customers are almost unbelieveable. How can the man-in-the-street know who he can trust? The story in the paper today about Goldman Sachs says it all!

Guest
Richard says:
16 March 2012

Two comments:

Firstly, surely all that is needed is for there to be greater adherence to, and enforcement of, the FSA’s existing “Treating Customers Fairly” requirements.

Secondly, the comments re FOS are somewhat unfair. In the days when complaints were fewer and FOS was staffed by experienced professionals, complaints were considered on their individual merits. The problems have arisen because of the overwhelming volume of complaints in recent years, starting with those relating to mortgage endowments, and the consequent need to draft in less experienced people and the application of a formulaic approach to complaints.

Guest
Sian says:
16 March 2012

The so called “independent” FOS is overwhelmingly staffed by ex- finance industry people – look at the Ombudsmen’s backgrounds. We need more consumer champions there: Which?, CAB, NationalDebtline people not those trained in the evil ways of the banks, dodgy lenders and debt collectors. Richard is right it started with endowments, then there was Equitable Life, then there was PPI, unfair charges, irresponsible lending, poor treatment of vulnerable customers, etc etc. These crooks need policing rigidly, not “requirements”. Roll on the FCA, the tougher the better.

Guest
Harry says:
17 March 2012

So far as savings are concerned, the FCA urgently needs regulations to ensure that each bank gives the same set of interest rates to *all* its savers, no matter whether their account has been open a day, a month, a year or 30 years.

It should start by absolutely banning all promotional rates, which are nothing more than a bogus way of advertising interest rates that most customers of that bank will not receive at all, and nobody will receive permanently. Instead, the banks should be forced to have standard account types (limited to no notice, 30 days and 90 days) advertising a single interest rate for each notice period no matter how long they have been held or whether it is closed or current.

It is possibly acceptable that banks can pay higher rates of interest for genuine factors that reduce costs, such as internet-only accounts and having higher balances, but it is completely unacceptable that banks are allowed to advertise misleading and unsubstainable rates that existing customers do not automatically receive too.

Guest
Alex - Bristol says:
21 March 2012

Dear Mr Martin Wheatley,
Please could your staff regularly test banks compliants proceedures are actually working and that mistakes are learnt from and feedback in to the banks system to improve it so the same mistake doesn’t keep happening to other customers.

I had a recent experience where I took out a mortgage with one of the biggest building societies in the country and they made a number of mistakes in setting it up for example to give me £155,000.00 without checking the buildings insurance was set-up with their own insurance department. I found out three weeks after I’d moved in my house it was not insured, in year 2012 basic mistakes shouldn’t still be happening, I reported it to them which meant phoning a call centre and they gave me £20 as an apology but no attempt was made to contact the branch to understand how it happened and learn from it so it doesn’t happen again by improving procedures.
Thank you,
Alex

Guest

Thank you for your comments so far. We are still putting together plans for the FCA so these are useful points for us to take on board.

You have all raised a very wide range of issues and I am very concerned by some of the personal experiences you have shared with me. These are exactly the type of issues that we will be aiming to tackle with financial services firms to deliver a fairer deal for you.

A fairer deal means spotting potential issues early on and acting before it affects you. We cannot afford to wait for issues to affect a large number of consumers before we act, as has been the case with PPI. One of the ways that we will do this is by making sure that firms don’t design products just for profit – they must be developing products that will be genuinely suitable for your needs.

Thank you for the thoughts on promotional savings rates. This very much matches up with the feedback I received at the event.

Martin

Guest

So will the FCA be regulating under the same “Hampton principles” as the FSA did and admitted that they failed completely?
With this in mind will you be using your influence with the government to pressure for a return to an “enforcement” regulatory system – one that represents and protects the consumer – instead of the “advisory” regulation we have now?

The mis-selling of PPI is not about the product (mostly), its the manner and circumstances in which it is being sold by all the major players.
So your assurance that you will be shaping PPI products before they get to the customer has, for the most part, no relevance.
In the case of PPI – the majority of complaints are because the product was not required and the customer was pressured into buying it, sometimes with false claims about what the policy actually covers.

The best way for a customer to protect themselves I would advise, is to record everything, even sales conversations. If a complaint comes about, not to go via enforcement bodies/regulators, but take it straight to small claims and present the evidence before a Judge, for a truly impartial decision.

Guest
B Wilkinson says:
23 March 2012

In my opinion, until we as customers force the banks to treat us better by leaving them. or not using their products if we think them unfair, nothing will change. As discussed by some of the customers above, all the industry including the regulator’s office is staffed by ex bank people and financiers who basically want to maintain the status quo so that they can keep on fleecing the customers who allow them to. Until we as customers vote with our feet, nothing will ever change.

Guest
Sandy says:
7 May 2012

hi, I really hope something can be done about PDL’S and their underhand tactics, IE putting money into your account without your knowledge and then asking for twice and sometimes three times back the amount they have deposited ,the APR, INTEREST and Charges are disgusting,time to stop these PAY DAY LOANS they prey on the vunerable .

Guest
Alex - Bristol says:
27 May 2012

Hello again Mr Martin Wheatley, new topic this time mortgages, I’m looking for a new mortgage and am finding it incredibly difficult to compare mortgages between different providers because of the way banks and building societies are presenting the figures to customers with extra charges like Booking Fee, Completion Fee, Arrangement Fee, Exit Fee, Redemption Charge, Interest Reverting To, etc. which can run in to thousands of pounds. I know I’m not alone because the comparison websites struggle to get the figures right to. The lenders have followed the same route that utilities companies and airline companies with overwhelming the customer with different figures and extra charges and as we know there have been lots of complaints about it so regulatory bodies are being asked to take action like Ofgem. The mortgage “Key Facts” document is a great help in trying to understand the overall cost product but does need updating because to get the document you have to spend 30-60 minutes with the financial organisation before they will issue one so it makes it very difficult to compare across most financial organisations quickly to see who is competitive and who isn’t. My point is if I want to borrow £100,000 for a mortgage, quite a common request, I should be able to see briefly what it will cost me for most for lenders without having to go in. So my suggestions are:

1/ The Key Facts document is updated to expand the “Overall Cost Of This Product” to include a new figure “Overall Cost Of This Product For 3 Years” so as you probably have guessed this would be the figure if I held the mortgage just for three years and it includes ALL the extra charges that I mentioned earlier like Booking Fees, Completion Fees, Redemption Charge, etc. Three to five years is a good time for customers to review their mortgage account and check the market again to see if they are still getting a fair deal and to consider if they should switch to another lender or product. It is also a fair time for lenders.

2/ When lenders market their products on web sites, literature, in branch windows customers need an easier and quicker way of seeing whether it is a good offer or not as displaying the APR is no longer any good on its own and its meaning is confusing to customers so I suggest a standard set of illustrations must be supplied as laid down by you and your team. So a good example would be the “Overall Cost Of This Product” figure displayed from the Key Facts document based on a standard amounts like £100,000 borrowed for 25 years. I do like that Overall Cost Of This Product..! So you can probably guess my next favorite figure, it is the one I suggested in point one, “Overall Cost Of This Product For 3 Years” based on £100,000 borrowed for 25 years, and is also displayed with all lenders marketing material. Of course these are just my examples but anything we can use to bench mark lenders products is better than nothing.

Thank you for your time,
Alex

Guest
Margo says:
30 June 2012

How many personnel are going to be in the FCA? I fear that it has a huge task ahead of it and not enough manpower or hours in the day to do it. I welcome the arrival of a regulatory body with more “teeth” but I hope that it can cope. From the above comments (and my own experiences) the customer is certainly not king. (Sadly, I know that this is not confined to the banking industry.) I have had to endure the hard sell in two (separatey owned) banks when I enquired about savings products recently. Both banks tried very hard to sell me investment products which I had told them in advance that I did not want. This is the tip of the iceberg. I won’t even begin to tell you about the problems I have had with one bank recently regarding an insurance policy. Letters going into “black holes”; faulty paperwork; illiterate paperwork. Need I go on …?!

Guest

Worth noting by which? and the public at large;

LIBOR – Barclays remain “compliant” with the financial services authority despite it’s admissions.
The FSA failed to pick up on this because under Hampton principles – no inspection can take place without good reason (also a major factor in the case of RBS) – regulators of USA were investigating, not our own regulator.
Only when other country’s regulators highlighted and started moves in the courts to fine Barclays did the FSA start to act.
The FSA are not subject to the freedom of information act, so the public have no way of finding out exactly how many people/companies reported it to them before regulators abroad made it impossible for the FSA to ignore.
Many have called for Barclays to be prosecuted and questioned why an admission of misleading on LIBOR has resulted in no prosecutions – this is simple to answer, the Hampton principles and 2008 regulations put on the statute book because of it prevent this.

Barclays trading license can be removed under legislation, if the FSA so wish, but because of the Hampton principles, this would be “detrimental to the needs of the business” so cannot be enforced. Barclays would appeal through the courts, undoubtedly win it’s case and cost the taxpayer millions).
As Barclay’s consumer credit licenses cannot be taken away, all the FSA can do is “speak to” and “work with” them.
With their licenses remaining they continue to be deemed “compliant” with the regulator (FSA).

In practice, this blocks a criminal case from being taken out, keeping it in the civil area of action and enforcement.
http://en.wikipedia.org/wiki/Regulatory_Enforcement_and_Sanctions_Act_2008
(see summary of parts 3 & 4 of the act – which came into law in 2008 as a direct result of the Hampton report published in March 2005, being adopted across the board, in all areas of regulation)

The same regulatory code applied to RBS, when they overstretched and tried to become one of the biggest banks in the world, too far too fast and got their fingers burnt.
This single failing cost the British taxpayer £45 BILLION (almost the entire armed forces budget per year) and leaves the taxpayer today sitting on (according to government estimates) a £25 BILLION loss that will never be recovered.

The all new FCA will be governed by the exact same legislation, so how they propose to “stop things happening before they happen” ie, prevention, is still unanswered.
Under the act linked to above, the “compliant” business are still exempt from inspections without good reason, only have to provide limited information when required to and this information is produced by the business concerned, not as a result of the regulator/enforcement body turning up and going through the business’ computers/records, etc.

The most daunting thing for me about the Hampton principles, is that much of what was available online regarding this, is slowly being edited away.
Websites that formerly posted about it are now replacing the facts with “summaries” or removing the information altogether.
MPs will not even mention it, regulators are ignoring basic questions on it, select committees in parliament do not point to it, yet to even the most casual observer, it is glaringly obvious that it is the root of problems across the board.

The FSA, the new FCA, trading standards, OFGEM, OFCOM, all ombudsmen services, OFT, etc, are all forced to work under the Hampton principles and continue to do so.
“Compliant” regulation, does not work.
Businesses cannot be trusted, because businesses were the ones consulted (under the spin of being called “stakeholders”) and shaped the Hampton report in March 2005.
Have a quick read through the Hampton report summary available online, it’s an eye opener and reveals exactly why Britain is in the mess it’s in today.

If this regulation failed on such a huge scale with the banks, then why does this same (lack of) regulation continue to be applied to car insurance, supermarkets, all other areas of big business, etc?
Rip off Britain is commonplace, until a conviction politician gets into power and removes Hampton principles and advisary regulation, it will continue to happen.

Guest

Some people at Barclays and presumably other big banks appear to be guilty of fraud and so should be prosecuted for it. I just don’t buy the argument that they were compliant with financial services legislation and so can’t be prosecuted. It looks like simply ordinary fraud though highly complex, so can be prosecuted for committing fraud – on a grand scale.

Bob Diamond as head of that part of Barclays at that time clearly must , I believe, be held to account. Either he knew and was complicit and should be prosecuted. Or arguably he’s been guilty of gross negligence in failing to manage properly and know what was going on – the Rupert and James Murdoch defence – and I believe should be sacked without any pay off or bonus.

If bankers were benefit claimant who had forgotten to declare an odd few pounds of one off income, the DWP would show no mercy in prosecuting him. So why should wealthy all powerful bankers with such a shoddy culture be treated differently?

And why did it take the USA to find out about this fraud? Perhaps we should encourage the USA to extradite these bankers for prosecution in the USA if the UK authorities won’t. (I’ve been generally appalled by the operation of the US-UK Extradition Treaty being used to extradite UK citizens for crimes committed in this country, but if the UK authorities won’t act on this one perhaps the USA will!)

Martin Hughes

[This comment has been partly edited for libel reasons. Thanks, mods.]

Guest

“Some people at Barclays and presumably other big banks are clearly are guilty of fraud and so should be prosecuted for it”
I agree, but who is going to take this on?
Barclay’s have admitted it, others will no doubt follow, but the regulatory code prevents a criminal investigation, keeping the issue in the civil area, which means no prosecutions, no criminal convictions, etc.
A regulator/enforcement body will not touch it – the public will get the sorry excuses we hear time and again about lack of funding/resources, the truth is, that as we saw in the case of RBS, under regulatory code, in the eyes of the regulator they have done nothing wrong.
Simple question for the FSA to answer… Barclays have admitted what they did, so why do they still hold a consumer credit license to trade?
In the eyes of the FSA, Barclays is still deemed to be compliant, why is that?

The answer is that the Hampton principles of “advisary” regulation and the regulatory code that came from it, prevent any regulator taking action that is detrimental. The “needs of the business” must be considered before any action can be taken, if found to be harmful to that business then there is no legal footing for the regulator to go ahead with it.

“I just don’t buy the argument that they were compliant with financial services legislation and so can’t be prosecuted”
You don’t have to “buy it” Martin, it is fact.
Barclays are still “compliant” with the regulator, as they are doing what the regulator has asked for in discussions.
A “Compliant” status with a regulator has benefits, benefits that were used by RBS for example, limited information given, no inspections without reason, etc, which is , presumably, why neither Fred Goodwin nor anyone his team were prosecuted and are involved to some degree (we are told) in the LIBOR investigations. Despite this they remain “compliant” in the eyes of the FSA.
Don’t take my word for it, I’ve been asking the FSA this for days, they refuse to give an answer in any public forum and freedom of information act does not apply to them, so they will no doubt continue to ignore my basic questions.

Facts remain that Barclays have admitted what they have done with LIBOR yet not one thing has changed with the FSA. They are still compliant, they still have their consumer credit license to trade under. They shall pay out, is it around £64 million to the FSA? That will be back in their accounts via customers pockets within 12 -18 months and everything will carry on as before.

If Bob Diamond was a benefit claimant who had forgotten to declare an odd few pounds of one off income, the DWP would show no mercy in prosecuting him. So why should wealthy all powerful bankers with such a shoddy culture be treated differently?
Perfectly reasonable question/point to most people Martin, but not those in power, so why not?
The last government wanted to be seen to be business/economy friendly, current opposition leader was in the government when Hampton principles were made law in 2008.
The current government are currently planning to extend the reach of Hampton, to include government departments, so they can sell our information on the same footing as a business does.
There is already a consultation out, due to finish in October 2012, about having companies buying our information from government departments and government depts working “closely with selected businesses” which would help some government services.
They have no reason to rid us of the regulatory code, as they can use it to their advantage.
With current opposition and former government bringing it in and the current government wanting to extend its remit, the general public have no chance.

“And why did it take the USA to find out about this fraud?”
With anything, the regulatory code (coming from Hampton) covers all businesses in the UK.
Although the FSA, OFCOM, OFGEM, OFT, trading standards, etc, will deny it, unless a certain number of complaints come in about a business they will not act.
I dealt directly with the charity commission, which are regulators of the charity industry, they just filed the complaint and openly told me that unless they get around 3000 complaints about the same issue, it will be filed for 6 months and not acted upon.

It’s all very well chasing headline grabbing scams for maximum publicity, but the reason we have a rip off society is because Hampton principles prevent action, prevent inspection without good reason (which means from a big official body like a foreign regulator, to you and me), whilst taxpayers pay millions each year for official protection that we are simply not getting.

[This comment has been partly edited for libel reasons. Thanks, mods.]

Guest

About 3,000 people from the FSA, including virtually all the support functions, will go to the FCA, which will supervise markets, smaller brokers and advisers and will watch how financial institutions of all sizes treat their customers. It is expected to remain in Canary Wharf. The FCA will carry on two of the FSA’s biggest projects: the retail distribution review, which focuses on investment products and advice for retail customers, and the mortgage market review

Add to this that Martin has now been asked to run an investigation by the Chancellor, will the FCA actually be led from the front, or simply carry on the failings of the FSA but under a different name?

Guest
JANE DAVIES says:
10 August 2012

What kind of retraining are these ex-FSA people getting? They need to change their mindset from pro industry to pro consumer first and foremost. Any business that puts consumer detriment over and above personal gain is not fit for purpose. You cannot leave any wriggle room for finance companies and you must be able to move quickly when loop holes are found. The FOS has to stop using the Banks’ own Banking Code to judge banks’ behaviour. The FCA has to police consumer complaints.

Guest
Waldo Derbyshire says:
21 May 2014

Ombudsman service ref 1006-4902

Mr H was in his forties and working long hours for less than minimum wage as a chef. In 2000 he contacted the bank where he had his current account to cancel his direct debit contributions to savings plan, but the bank refused and his account became overdrawn, so the branch staff provided him a loan of £2700 at a cost over four years of £4670!

After the bank had provided this loan he soon became overdrawn again and unable to maintain repayments, this loan was refinanced with a greater loan of £3000 at a cost of £5550 over five years.
When again after three months, he was unable to maintain repayments, this loan was refinanced with a greater loan of £4500 at a cost of £7743 over five years.
When after five months he was again unable to maintain payments, this loan was refinanced with a yet greater loan of £6400 at a cost of £10750 over five years.
When again after 10 repayments he was now unable to maintain repayments of now £179 per month, this loan was refinanced with a yet greater loan of £9600 at a cost of £15590 over five years with repayments now an eye watering amount if £260 per month!
When again after 9 repayments he was again overdrawn and unable to maintain payments, and was threatened with legal action by the bank!
So each new loan consolidated the previous one.

By March 2004, Mr H found himself with a debt that he had no realistic means of repaying. He complained to the bank, but could see no way forward with a debt so large. He felt the bank should have considered his ability to repay before lending him such a large sums, and said the bank was responsible for his present predicament.
In order to avoid legal action, was forced to take out a second mortgage of over £20000 via his mortgage provider to repay the credit charges and credit card account he had also used in trying to meet repayments!

First appearances suggested that Mr H was not earning enough to support the borrowing. From the difficulties in meeting the repayments it appears that all the loans were actually unaffordable! This is confirmed by looking at the current account which showed that the repayments were continually creating an overdraft on Mr H current account.

Each time he became overdrawn, the branch bank staff coerced him to take out a greater loan to clear the overdraft and repay the old loan. He had been sold payment protection insurance with each new loan. This made the situation worse, as the premium added a significant lump sum to the accumulated debt. This pattern of borrowing meant that Mr H had ended up with a extremely large loan and could not reasonably afford the repayments.

It should have been clear to the bank that Mr H was having difficulty affording the loan repayments, since it also held his current account, and took this into account when investigating Mr H situation.

Complaint rejected:
The FOS somehow stated that this was “fair and reasonable” and “the bank should do nothing”!