FCA to review how it runs redress schemes

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Incoming FCA chief executive Andrew Bailey is set to examine how the FCA deals with redress exercises.

Speaking to the Treasury committee earlier yesterday, FCA chairman John Griffith-Jones says Bailey will work with the regulator’s board to draw upon its experience of dealing with issues including missold payment protection insurance and interest rate swaps.

He will also question how the FCA should operate redress programmes in future.

Griffith-Jones said: “One of the crucial things Andrew Bailey and the board will look at when he arrives is how we deal with these redresses.

“How do we get a scheme to begin and end to the satisfaction of everybody that we’re doing a decent job? If you look at PPI or swaps, or other difficult cases, it’s still a work in progress.

“It’s very easy to start these things, but it seems very difficult to finish them.”

An FCA spokeswoman declined to comment further.

Griffith-Jones’ comments come after acting FCA chief executive Tracey McDermott noted the regulator’s programme to handle interest rate swaps now has just 350 cases left to determine, having handled approximately 18,000 complaints.

The FCA will launch a specific “lessons learned” exercise relating to interest rate swaps after the final cases have been handled, but McDermott argued despite complaaints from MPs, the regulator currently believes the programme has performed effectively.

McDermott says: “Our current assumption is overall the scheme has worked well, and there are other options for customers who believe it has not worked, be that the Financial Ombudsman Service or the courts.”

Separately, Labour MP John Mann took Griffith-Jones to task over his failure to interview Andrew Bailey prior to his appointment as the regulator’s new chief executive.

Bailey was appointed at the FCA in January and is set to take on the role from July, following the appointment of Sam Woods as PRA chief executive.

However, Mann blasted Griffith-Jones over the regulator’s recruitment process for failing to interview Bailey before his appointment.

Griffith-Jones said initially acting FCA chief executive Tracey McDermott and Australian Greg Medcraft were shortlisted for the role.

But he said when McDermott dropped out Treasury second permanent secretary John Kingman, who was leading the recruitment process, decided to call in Bailey.

Griffith-Jones said Bailey was not interviewed because the Treasury felt he was better known than Medcraft, who was at that point the only remaining candidate.

However, Mann questioned Griffith-Jones’ role in the process.

He said: “Don’t you regard in your position as chairman of the FCA it quite extraordinary that someone is appointed to a role that has been seen as controversial over the previous year, where the previous incumbent has left not necessarily of his own volition, lots of public debate on it, and yet you think it perfectly reasonable to have someone appointed and you don’t even have the opportunity to ask any questions on his motivation.

“It’d be fair to say you as chairman of the FCA, in reality, had no role of any consequence in the appointment of the chief executive.”

However, Griffith-Jones replied he had “a significant, if not controlling” role.

He said: “If I had been deeply unhappy with the appointment of Andrew Bailey as chief executive you can rest assured I would have made my views known privately and strongly to the Chancellor.”