Firms still letting customers down

Firms selling payment protection insurance (PPI) are still failing to treat their customers fairly, writes Johanna Gornitzki.

According to the Financial Services Authority's (FSA) latest review of the PPI sector, a number of companies are still not meeting the regulator's guidelines when selling the cover.

Following visits to 40 firms, the review found there are three areas of particular concern, including lack of clear information given to customers, and many firms failing to establish whether the policies they are recommending are suitable for a particular client. It also unveiled that when customers are sold single premium policies it is not always done with the best interests of the customer in mind.

Clive Briault, FSA managing director of retail markets, said: "As we have made clear before, when sold properly PPI can provide valuable protection against changes in personal circumstances. But despite some improvements in standards, major weaknesses remain that go to the heart of the culture surrounding PPI sales.

"The bottom line is that customers should come away from the sale having been given the best possible chance of understanding PPI is optional, what the policy will and will not cover and how much it costs. On the strength of our findings, the industry has further to go to demonstrate customers really are being treated fairly in this market," he said.

Commenting on the findings, Tom Baigrie, managing director of LifeSearch, said: "There are many problems associated with PPI. To sell the product without advice - and without mentioning income protection - while still treating the customer fairly is pretty much a contradiction in terms. In reality, by the time the seller has got through half of the details consumers ought to know the customer would have lost interest, which is why sellers so often skim over the flaws."

The FSA will conduct further work into PPI next year to ensure senior management addresses these areas of concern.