29th June 2011
Using the example of the PPI misselling scandal, Sants, who was speaking at the British Bankers' Association conference in London said the £15bn compensation paid to customers over the past 20 years was unacceptable and that including PPI redress, this would mount to £20bn.
The move to a new ‘twin peaks' regulatory structure in 2013 would require a change in the mindset of both banks and regulators.
Under the new arrangements, due to come into force in 2013, there will be two new regulators: the Financial Conduct Authority (FCA) which will replaces the current FSA and regulate 27,000 financial institutions including retail banks, insurers and financial advisory firms and the Prudential Regulatory Authority (PRA), of which Mr Sants will be chief executive, which will supervise around 1,000 deposit takers.
Mr Sants said the FCA would take a more interventionist approach and step in to ban products which could damage consumers or were likely to be missold.
He said there were trade-offs for society to consider, such as to what degree consumers should be given the freedom to make their own financial decisions.
"In practice, consumers pay scant attention to the information given to them," he said, so it was necessary for the FCA to make more judgements about whether products were appropriate for them.