Appearing at the Banking Standard Committee, Wheatley – currently managing director of the Financial Services Authority – said it would be “near impossible” for the incoming Financial Conduct Authority (FCA) to pre-approve products.

When Lib Dem MP John Thurso asked whether a “kitemarking system” would be a positive step for the financial services industry, Wheatley replied: “We don’t see ourselves approving products. Not only is it near impossible but this would stop the industry innovating and creating.

“We are not supportive of a pre-approval process but there needs to be change to communication from banks over products for the financially illiterate.”

Wheatley has previously made clear the FCA would “go further” in ensuring product suitability, leading to speculation as to whether the regulator would pre-approve products.

In ‘Journey to the FCA’ the regulator said it would “intervene early, to pre-empt and prevent widespread harm from happening to consumers from happening in the first place, rather than clear up after the event”.

However, MPs were told the prohibitive cost associated with vetting individual products has made it an unworkable proposal.

The FCA will form part of a tri-partite model of financial regulation replacing the FSA when it starts work on 1 April. It will be responsible for conduct regulation.