As Which? Money publishes details of a couple who paid £22,568 in payment protection insurance for a £56,000 loan, the consumer watchdog has written to the Financial Services Authority (FSA), calling for an overhaul of the PPI market.
Which? personal finance campaigns manager, Doug Taylor, says:” Slapping firms on the wrist with large fines is a start but does not go far enough. Firms still being fined for PPI failings shows that the problem will not go away on its own and PPI's relatively low profile means the number of complaints does not necessarily reflect the number of mis-sold policies. The FSA must do more to deter firms from mis-selling in the first place, ensuring that all victims of mis-selling are automatically compensated with a fair and robust system."
Which?'s demands to the FSA:
- All PPI sales from firms found guilty of mis-selling should be pro-actively reviewed and where mis-selling has occurred, customers be adequately compensated
- A robust FSA and company communication strategy whereby companies write to all customers with a PPI policy enclosing personalised information on how much they have paid, and FSA factsheets on:
- An explanation that there are major issues of concern with the PPI market
- An explanation of what would be an appropriate sale, and what would not
- What to do next if you think you were mis-sold
- FSA must develop a 'redress payments calculator' for PPI which would ensure consumers are adequately refunded and that the redress offered is fair and reasonable
Information on PPI:
- When sold alongside loans or finance agreements, PPI is sold as a ‘single premium policy', which means a lump sum covering the cost of the insurance is added to the amount you have borrowed, so you end up paying interest on both the insurance premium and the loan
- The FSA has so far taken enforcement action against 13 firms found guilty of failings with PPI.