The Association of British Insurers' recently-launched Consumer Guide to Payment Protection Insurance is doing nothing to address the mis-selling issues and is not helpful to those purchasing cover, says Simon Burgess from independent payment protection provider British Insurance.
Simon says: “With the payment protection insurance sector under investigation by the Competition Commission for its low claims ratios, high commission rates, price differentiations and product variations, the ABI along with trade bodies representing banks and building societies, published a Guide in the belief it will help educate consumers and allow them to make an informed choice. TheABI and its cohorts should look closer to home and tackle the root cause of this widespread malpractice by reducing the vast variations in policy cover and prices and setting out guidelines for members, rather than expecting consumers to ensure they have been sold the right product. The ABI has already said many customers lack the financial capacity to process the information available and manage their financial risks, so why does the Guide ask consumers to base their choice on policy summaries, benefits and main exclusions? Why isn't the onus on the provider? In recent research, Which? found sales staff were not informing consumers about policy exclusions and the differing terms and conditions, so how can they be better informed? Insurers and financial providers need to simplify their products and ditch those high-pressure selling tactics which have resulted in so many claims being rejected because policies are mis-sold. Consumers are being exploited by the High Street lenders with point of sale advantage and desire to squeeze as much cash out of them as possible, regardless of whether the policy is suitable or not. Until fundamental issues are addressed, I do not believe these bodies are acting in the consumer’s best interest."
British Insurance says premium variations are rife with its own products 10 times cheaper for loan, 4 times for mortgage and 5 times for income protection.
Income protection: News update: July 2007