Sir Howard: speaking his mind

Sir Howard said he had been surprised by the level of financial mis-selling cases he had encountered and accused financial firms of not treating customers fairly.

"I would have thought, in my simple-minded way, that paying out over �11bn in compensation would have focused the minds of firms more than it evidently has on the need to be sure that their selling practices are compliant and ethical," he said.

Sir Howard added that successive mis-selling scandals now meant that many independent financial advisers were finding it difficult to obtain professional indemnity insurance.

Insurers pushed up the premiums after becoming nervous of the string of mis-selling scandals, including pensions and endowment mortgages.

The price of this insurance for financial advisers needs to come down urgently, he said.

Unethical

Sir Howard told delegates that making sure firms ensured products were suitable for the customers they were sold to was probably the key issue facing regulation during the coming months.

If firms do not pay sufficient regard to suitability, consumers are bound to be suspicious Sir Howard Davies

He added that some financial firms pay "too little regard" to treating their customers fairly.

In particular, firms came in for criticism for failing to inform customers of investment risk and selling them unsuitable products.

"If firms do not pay sufficient regard to suitability, consumers are bound to be suspicious. This, in my view, is probably the key issue in financial regulation which we collectively need to resolve over the coming months," he said.

Schemes designed to encourage low earners to save and stakeholder pensions also came in for criticism during the speech.

Happy to leave?

Sir Howard also suggested that he will be relieved to be rid of his regulatory challenges when he leaves his post in September.

"In the first draft of the speech I wrote that "sadly" this would be my first and last appearance [at the Insurers' conference]."

"But I have always taken the view that a regulator must be scrupulously honest at all times, so 'sadly' had to go," he said.