Qualified advisers answering your
Financial Questions
call 0800 092 1245

Pension reforms will not result in PPI style scandal – FCA chief


The government has been assured that pension freedoms will not result in customers being mis-sold financial products on the same scale as the Payment Protection Insurance (PPI) scandal.

The Public Accounts Committee recently started an investigation into the handling of “mis-selling, regulation, redress”, and has asked the FCA about how the PPI scandal was handled.

Tracey McDermott, chief executive of the Financial Conduct Authority (FCA), has claimed that valuable lessons were learned from the PPI scandal, and that a similar situation will not be repeated with the pension freedoms.

Banks and other financial organisations have been fined a collective total of £22.5bn to date, and McDermott claimed that these fines were the best deterrent to mis-selling ancial products.

However, McDermott does remain concerned that up to £5bn of these fines have been paid to claims management companies, despite customers being able to make a complaint to the FCA for free.

She said that while this surprised her, the majority of people were making the decision themselves to use a claims management company. Additionally, she claimed that a lot of people did not believe that banks would handle their complaint if they complained directly.


Despite financial deterrents, McDermott said that there are still risks that mis-selling will happen to some degree, by stating: "Fundamentally there will always be a risk that there will be some mis-selling in any product that involves advice and sales.

"But what we are trying to do is ensure that is at a level that is minimised."

She also responded to questions about the presence of safeguards to ensure that the new pension reforms would not become engulfed in a similar scandal, by stating that the FCA were constantly analysing the market and making sure that customers were aware of the risks of certain products.

McDermott also said that the FCA restricts how complex financial products are sold, and retains the option of banning certain products all together.

Need financial advice?

If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.

Share this..

Related stories

Financial Guides

Financial Calculators

Our useful calculators can help you get your finances in order:

Latest News


Helpful new tax year facts that could affect you and your money

Blog | Seven helpful new 2016/2017 tax year facts that could affect you and your money. Our recent online blog shares a brief outline on how to stay up to date.

Read more

Useful Links

Popular Searches

Please Enter More Details

Enter More Details