The regulator will take action against non-compliant companies selling PPI
By Peter Carvill
The Financial Services Authority (FSA) will impose harsher fines on companies that are systematically failing to comply with minimum standards when selling payment protection insurance (PPI), the latest report from the regulator has revealed.
In a document issued by the FSA about payment protection insurance (PPI) selling standards, it outlined the extent to which firms had been given ample amount of warning on their obligation to treat customers fairly both generally and in the PPI sector.
The report detailed little progress had been made to this already blighted area of the market.
Simon Burgess, managing director of British Insurance, said: "The FSA has been doing important work and we are very pleased that they are taking PPI seriously. The market is dysfunctional in its operating and this is to the detriment of customers and needs to be cleaned up with some urgency."
Clive Briault, managing director of retail markets at the FSA, indicated that while there had been some improvement, PPI firms failed to comply with the FSA standards for the majority of the key areas the FSA looked at.
This interim report of the third phase of work, instigated in January, assessed whether firms had made improvements in five key areas of selling the product. Improvements were only found in two of the areas, but the report showed that at least now the vast majority of firms are making it clear to customers that PPI is optional; and firms are now offering cancellation refunds on virtually all single-premium PPI policies.
Commenting on the turgid rate of improvement in the market, Burgess added: "I'm surprised there have been any areas of improvement. The current situation is a disgrace, and needs to be dealt with urgently."
In addition, the report found many firms were still not giving customers clear information about the product; what it will cost; the extent to which they are eligible for PPI cover; what they are covered for; and not telling them why, where advice is given, the recommended PPI policy meets their demands and needs.
Andy Couchman, director of Bank House Communications, commented: "I applaud the action that the FSA is taking. I do think we're in a difficult situation at the moment as the regulations of PPI are changing but I do think that anything the FSA can do to clarify the situation is a good thing."
