The Financial Services Authority is stepping up its intervention into the poor sale of payment protection insurance after a mystery-shopping programme revealed very few consumers are being told the true cost of PPI.
FSA retail markets managing director Jon Pain says: “Tackling poor PPI sales practices remains a high priority for the FSA. We will intervene to ensure consumers are protected and are considering what regulatory powers are the most appropriate to deliver fair outcomes. Firms may wish to consider stopping selling single premium PPI sold alongside unsecured personal loans, given the continuing problems in the sales of this product."
The FSA’s mystery shopping programme captured customer experiences of face-to-face branch sales of single premium PPI when sold alongside an unsecured personal loan. The results showed:
Very few customers were told that the cost of the payment protection would be added to the loan as a single premium and that interest would be charged on this amount
Only half of customers said that they were told about the key limitations and exclusions of the policy - this is fundamental to establishing a customer's need and eligibility; and
Many customers were not told of both the monthly cost and total cost of their PPI - at the worst performing firms very few customers were given adequate information on the cost of their policy.
Income protection insurance: News update: September 2008