Last checked at 
By Huw Jones
LONDON, May 13 (Reuters) - Allowing people to cash in theirpension pots is a potential trigger for mass mis-selling afterregulators have proved too "passive" in tackling the loaninsurance scandal, British lawmakers said on Friday.
There was no guarantee that efforts by regulators to improvebehaviour at banks will stick as the regulatory spotlight movesaway, parliament's Public Accounts Committee (PAC) said in itsreport on financial services mis-selling.
"The Financial Conduct Authority and the Treasury must domore to know how much mis-selling is happening now, and whichregulatory activities work best to prevent it," the report said.
Lawmakers expressed concern over new "pension freedoms"which allow people to take cash from their retirement savings.
"Product innovation can also make mis-selling more likely,particularly if products are especially complex," they said.
The FCA was launched in 2013 to help draw a line under yearsof mis-selling, ranging from pensions to home loans. Banks inBritain are still paying out compensation for mis-sellingpayment protection insurance (PPI) or insurance on loans.
It was a sign of regulatory failure that 5 billion pounds ofthe 22 billion pounds paid out so far has gone to companies thatmanage claims for 12 million PPI customers, the report said.
This was in spite of claiming compensation being free andstraightforward, it added.
There were substantial and continuing risks that financialproducts will be mis-sold as too little has been done to tacklethe industry's "culture problems" behind mis-selling.
Indicators were needed to assess the extent of mis-sellingin "real time", the report recommended.
The report also slammed the FCA for ditching a review intoculture at banks without articulating what culture it expectsfirms to have.
Andrew Bailey, who will head the FCA from July, said onMonday that improving the behaviour of banks is a top priority.
Lawmakers are concerned that the government's ousting ofhardline FCA chief executive Martin Wheatley last year couldlead to a softer approach to banks.
The committee asked the FCA to outline the actions it willtake to improve culture in financial firms and report back ontheir effectiveness in a year's time.
In response, the FCA said it was considering the PACreport's recommendations and was focused on improving cultureacross the industry.
"Firms' culture and governance is one of the priority areasset out in our business plan. However, it is right that firmsthemselves take the responsibility for setting, shaping andmaintaining their own culture, one with the interests ofconsumers at its heart," a FCA spokesman said. (Editing by Alexandra Hudson)
