The Treasury has demanded that the Financial Conduct Authority examine whether there were “systemic failures” in the regulator’s multibillion-pound compensation scheme for victims of the mis-selling of complex financial products.
Andrea Leadsom, the Treasury secretary, wrote to the regulator yesterday to ask it to investigate whether its redress scheme had been fair to thousands of small and medium-sized businesses that were mis-sold interest rate hedging products by banks.
Ms Leadsom said that she “strongly supports” recommendations in a Treasury select committee report, published on Tuesday, that was highly critical of the regulator.
It said that the FCA should “collect the information necessary to establish whether there are systemic failures in the redress scheme and publish its findings, a summary of the complaints it has examined and take any action it decides is appropriate to ensure that all customers receive fair and reasonable redress”.
Ms Leadsom added that this process should be overseen by one of the FCA’s non-executive directors. The Treasury’s decision to intervene represents further embarrassment for the regulator. Its compensation scheme has been dogged by complaints from businesses and MPs that it unfairly favours the interests of the perpetrators of the mis-selling over those of the victims.
Advertisement
Andrew Tyrie, the chairman of the Treasury select committee, said that the compensation scheme appeared to be “defective in a number of important respects”.
The FCA declined to comment on the Treasury’s intervention but said that it was considering “the Treasury select committee’s report and its recommendations”.