Since it came into being earlier this year, the regulatory successor to the Financial Services Authority has frequently stressed its forward-looking, pre-emptive approach to regulation.
However, a member of the audience at the British Bankers’ Association’s international banking conference raised concerns that the regulator’s tactics could lead to caution about product innovation.
Wheatley responded: “We are not a pre-approval body, with some exceptions, and I think that is a good thing.
He encouraged firms to engage with the FCA: “People are cautious, and so I do expect people to come and talk to us. We welcome that.”
The FCA’s early action on interest-only mortgages is an example of how the industry could work together and with consumers to head off a future criris, he said.
Wheatley also reminded firms that the new regulator would not simply rely on reporting requirements to get an impression of potential risks to consumers.
He said: “We take our intelligence from a very broad range of sources whether it is from the internet, social media, newspapers or consumer groups.”
The regulator would also be questioning firms with surprisingly high profit margins, he added.
Referring to the FCA’s publication of complaints data on Wednesday, Wheatley said the decision to share these figures had pushed complaints up the agenda of banking executives: “The really big thing for me is people think it matters.”
He praised banks for removing incentives which could lead to mis-selling – but said there was continued concern over protection sales.
According to FCA research, three of Britain’s largest banks had removed direct links between sales and incentives for front-line retail and call-centre staff.
Wheatley said: “On top of this, we are seeing evidence of others moving away from formulaic incentives to a more balanced approach. And it’s encouraging to see larger firms increasing tracking of customer outcomes in face-to-face sales.
“It’s true some concerns remain over the use of incentives in areas like investment and protection sales.”
The regulator had so far focused on financial incentives like bonuses, he added, and still had to look at other potential causes of mis-selling such as product design, performance management, sales processes and targets.
