A report published by the NAO suggested the lack of clarity on the outcomes of mis-selling complaints raised by consumers meant its current methods may well be ineffective.
In 2014, mis-selling accounted for 59% of customer complaints to financial services firms compared to 25% in 2010.
The investigation revealed the FCA’s failure to identify when the mis-selling activity took place meant it could not show it was dealing with the problem.
Amyas Morse, head of the National Audit Office, said his team’s access to the regulator’s records on firms’ behaviour was restricted by law which made it impossible to draw definite conclusions.
He added: “The information my staff could see, such as customer complaints, does not show any clear reduction in the extent of mis-selling,” adding “it has further to go to show it is achieving value for money.”
Morse did credit the regulator for making multiple interventions to affect firm and individual behaviour. These include its work on introducing restrictions on bonus structures through the remuneration code and imposing mis-selling fines totalling £298m from April 2013 to October 2015.
The report read: “Increased fines and redress payments appear to have substantially reduced financial incentives for firms to mis-sell products.”
In a statement on the FCA’s website, it said it was pleased the report recognised that reducing mis-selling cost-effectively was difficult. It also welcomed the conclusion that FCA actions had reduced financial incentives for firms to mis-sell products.
The regulator added: “The report makes clear that the recommendations, which we are accepting, are designed to build on the FCA’s current strategy and increase confidence that it is achieving its intended outcomes for consumers.”