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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

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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.


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….

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.

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.


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.

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……..

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?

Robert Shaw says:
15 March 2012

Another bureaucratic nightmare!

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!

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.

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.

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.