The Financial Services Authority (FSA) has a package of tough measures to protect consumers in the Payment Protection Insurance (PPI) market and ensure they are better treated when buying PPI or complaining about it.
Firms representing more than 40% of face-to-face sales in the Single Premium Unsecured Personal Loan PPI market have agreed to review these sales and redress those consumers identified as mis-sold. Ongoing supervisory action continues with the remainder of this market place.
These measures build on the agreement the FSA obtained from the industry earlier in 2009 to stop selling Single Premium PPI on unsecured loans.
For complaints about all PPI products, new measures will tackle the key issue that too many complaints are rejected by firms and then overturned by the Financial Ombudsman Service (FOS) in favour of the consumer:
- New guidance due to take effect by the end of the year will ensure PPI complaints are handled properly, and redressed fairly
- A new rule will require firms to reopen 185,000 previously rejected PPI complaints and reassess them against the guidance
In addition, the FSA is launching targeted assessment of sales practices for PPI on secured loans and credit cards. If the potential for mis-selling is identified, pro-active reviews by firms may be extended to these areas too.
Jon Pain at the FSA says, “Consumers should not be pressured or deceived into buying PPI and they are entitled to have a policy properly explained to them. It is unacceptable that despite previous warnings about poor sales practices, backed by 22 enforcement cases and significant fines, the PPI sector still needs the FSA to intervene on this. The outcome of a complaint about a PPI sale should not depend on whether or not the complainant persists past the firm on to the FOS. This is the last chance for the industry to show that it can act fairly, consistently and in the best interest of consumers on PPI. All firms operating in this sector should take note and where necessary get their house in order. Where we find questionable practices in sales or complaint handling, firms can expect that we will take action.”
The FSA has taken action against 22 firms over poor PPI sales practices. This includes the FSA’s largest fine in the retail sector on Alliance & Leicester that was fined £7m in October 2008 for serious failings in its telephone PPI sales.