Mark Hoban, financial secretary to the Treasury, added that in future the new financial watchdog, the Financial Conduct Authority (FCA), would intervene far earlier to resolve potential problems such as mis-selling of payment protection insurance (PPI) and other “toxic” products.
In a speech to a conference hosted by consumer group Which?, Mr Hoban said: “Taking the example of payment protection insurance: in this scenario the stronger competition duty and powers we envisage for the FCA would have allowed it to take targeted action to intervene swiftly, and tackle head on the ‘point of sale advantage’ that credit providers had.”
The new regulator, which will replace the Financial Services Authority next year, will have the power to institute an immediate referral to the Office of Fair Trading in instances where competition issues are affecting consumers, he said.
He added: “Under our new regime, we expect the FCA to take the initiative when it comes to tackling competition issues that cause consumer detriment.
“Let’s be clear, the FCA will be less prepared to see detriment occur, and more willing to step in and prevent it from happening, than has been the case to date.”
Mr Hoban said that where it spots a problem with a product, the new body will be able to impose a temporary ban with immediate effect for up to 12 months.