The PAC has highlighted the pensions freedoms reforms as a particular trigger for "future mass mis-selling".
Its latest report argues that the Treasury does not know how effective the FCA is in reducing mis-selling, and there are no good indicators of the current level of mis-selling.
The Committee is urging the FCA and Treasury to “do more to know how much mis-selling is happening now, and which regulatory activities work best to prevent it”.
It also expresses disappointment that claims management companies have made up to £5 billion from PPI claims, describing this as “a failure of the system of regulation and redress”.
In 2014-15 80% of complaints to the Ombudsman about PPI were made through claims management companies.
The Report states:
“In many cases, these companies merely package up payment protection insurance claims, but they typically charge between a quarter and a third of any compensation subsequently paid… the public bodies involved have been too slow in taking responsibility for this situation, and too passive in allowing it to happen.”
Meg Hillier MP, Chair of the PAC, said:
“The widespread mis-selling of PPI is a vivid demonstration of the risks facing consumers in the financial services market. The fall-out is still with us. Many people have waited years for a decision on compensation and, because of the way they have pursued their claims, even then they may not receive the full amount. Serious risks of further mis-selling remain.
“It is vital the Government and regulators take fresh action now to better protect taxpayers’ interests, both in reducing the potential for mis-selling and, when it does occur, to ensure those affected get their due compensation.
“We heard evidence of some diverse causes for products being mis-sold, ranging from incompetent or intimidating sales teams to badly designed and poorly targeted products.
“It is deeply worrying that while the FCA has taken some action to deal with these causes, it has since scrapped plans for a review of banks’ culture – this despite it being best placed in the system to conduct such a review. This sends a confused message to taxpayers and will do little to reassure potential customers."
