Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698924637006.pdf (United Kingdom)
Financial Services Authority Clive Adamson Director of Supervision, Conduct Business Unit Lord Myners House of Lords London SW1AOPW 13 March 2013 Our Ref: Case No.

1302 I 8Z Your Ref: HL5176 As you will be aware, on 14 February Lord Deighton asked us to reply to your recent parliamentary question.

A copy of this letter will be placed in the Library of the House.
To ask Her Majesty's Government how many bankers have been the subject of closed enforcement action by the Financial Services Authority in relation to the mis-selling of payment protection insurance (PPI); whether the Finan~ial Services Authority has reviewed whether boards of directors of banks were at fault in connection with the mis­ selling of PPI; and, if not, what the FSA has concluded was the responsibility of boards in connection with PPI mis-selling.
We can confirm that none of the 7 individuals who have been the subject of closed enforcement action by the Financial Services Authority in relation to the mis-selling of payment protection insurance (PPI) were bankers.

We have not investigated whether any individuals on the boards of directors of banks have been guilty of misconduct in relation to the selling of PP!.

The events in question took place several years ago.
Even if there was evidence available to prove misconduct in relation to PPI sold then, any disciplinary action is now likely to fall foul of the then applicable 2 year (now 3 year) limitation period for bringing action.
It seems likely that some firms' Boards did not provide robust and thoughtful challenge to their executives about the business plan and controls around PPI, given that: • • we received considerable resistance from firms to the improvements to PPI selling that we requested: firms were more interested in the major revenue stream PPI offered than in improving standards: and ''''11 I _,I..

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: 'r'i' I • there were failures in systems and controls around, and compliance monitoring of, PPI selling.
We' have learned lessons from PPI and other significant conduct failures by firms.

We are now much more focused on testing and challenging to ensure their business models are based on a sound foundation of fair treatment of consumers, supported by a strong culture to deliver this.

We expect Boards to play a prominent role in both these respects.
The Board is a significant component of the governance framework of a firm, which is crucial for effective oversight of the activities of a finn, including its conduct and treatment of customers.

Boards decide and approve firms' business models and strategy and have a role in setting the culture of the firm.

An effective governance framework should enable a firm to identify and manage conduct risks, including potentially unfair outcomes.
We would expect a cohesive framework of committees and management information that ensures rigorous focus on consumer outcomes and that conduct risk is managed effectively in practice within the business.

We expect to see evidence of Boards conducting high quality pro-active and forward-looking debate of issues, trends and conduct risks that are inherent in the firm's business model and strategy.

Such discussions would be assisted by an accurate and comprehensive picture of conduct risks.
Within their governance responsibilities, Boards should be satisfied that the firm is addressing and controlling these risks such that, in general, poor consumer outcomes do not anse.

We also expect Boards to understand the reasons for poor consumer outcomes in the past, such as PPI mis-selling, and to learn from these and take steps to ensure they do not happen again in the future.

I hope that this is helpful.

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