According to Simon Burgess, owner of specialist payment protection insurer British Insurance, banks and building societies have effectively pleaded guilty to charges levelled at them by the Office of Fair Trading, following its investigation into the payment protection insurance market.
At a meeting in London in late August, a collection of well known banks and building societies took the unusual stance of refusing to make any comment or attempt to defend their payment protection insurance practices, despite the stinging criticism they took in the OFT report earlier in the month.
Facing charges of poor competition in the market, excessive commission payments, inflated profits and derisory claims ratios, most of the high street banks and building societies chose to keep quiet rather than proffering a defence of their practices and procedures.
Simon Burgess, managing director of British Insurance says ' Many of the players in this market realise their stance is indefensible and are waiting until they are forced to make changes rather than act voluntarily. I think they realise an overhaul of the market is just around the corner, but are quite happy to continue making as much profit as they can until this happens. Many of the bigger players seem to think they are beyond the reaches of the regulator. Certainly in light of the FSA Treating Customers Fairly initiative it would seem many of their practices are out of line and yet they continue to do nothing.''
Payment Protection Insurance : News update: October 2006