FOS chief slams insurers for failing to stop PPI debacle
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The Financial Ombudsman Service has criticised insurers for not acting as soon as they became aware that payment protection insurance policies were being missold.
During a panel session at the Association of British Insurers’ conference in London last week, FOS chief executive Natalie Ceeney said the insurance sector has a collective responsibility to improve the financial services sector where it sees evidence of bad practice.
She said: “97 per cent of the cases we are seeing on PPI are to do with selling issues, not product design issues, but I also have had a lot of insurers say to me privately they knew their product was being sold badly through different channels and, with hindsight, perhaps they should have intervened earlier.
“I believe insurers should have, because if we could have avoided the recent damaging scandal over PPI misselling, it would have helped us all.”
ABI director general Otto Thoresen agreed that insurers should be prepared to step in.
He said: “We are in a position where we are part of a delivery mechanism. There is a system which is clearly interactive with customers but we sit behind that. The lesson for me is where we see things we are uncomfortable with we need to be quicker at raising these with our partners and seek to address them before they become big issues.”
Highclere Financial Services partner Alan Lakey says: “There is an element of truth to what Natalie Ceeney has said but it is the FSA that has an obligation to protect consumers and it was made aware about the problems with PPI a long time ago, so the regulator also should have stepped in as well as insurers.”
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Readers' comments (6)
Julian Stevens | 1 Jul 2011 12:38 pm
Bang on, Alan. What was the FSA doing whilst all this was building up? Beating up the IFA sector, cobbling together the RDR, paying most of its staff and directors big bonuses with other peoples' money and ignoring all calls for accountability and more cost effective deployment of its resources. Oh yes ~ and fobbing off letters from MP's on behalf of their consituents (as has happened to me and to many others), not to mention the TSC.
I'd still like to know how Hector Sants racked up an incredible £132,000 in car expenses last year. what does he have ~ a chauffered Bentley Mulsanne turbo?
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Mark Davies | 1 Jul 2011 1:11 pm
Intervened earlier. Does she mean stop companies from fleecing customers ? Surely not ? !
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FemaleIFA | 1 Jul 2011 1:20 pm
Well this should make things interesting...
Anyone seen the Aviva life insurance policies with front loaded commission....Barclays are now flogging with every loan?
Someone might want to check this out and compare how much the premiums would be direct or through an IFA?!!!
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Anonymous | 5 Jul 2011 1:46 pm
Weren't all these policies underwritten by the banks respective "In-house" life companies...
It would take a brave soul at any of these firms to report on their own parent bank!!!
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Phil Castle | 5 Jul 2011 2:43 pm
I agree with Alan Lakey and Julian Stevens comments above (and before someone says I agree with everything they both say, if you check my posts you'll find it's probably about 75% agree, 25% disagree).
PPI has been a known problem since BEFORE the FSA took over from the MCCB on mortgages and I knew it was a problem when I left branch banking and that was in 1991 for goodness sake.
Now if little old rural me, knows that, why don't those who are PAID to police the systeme know it? Eitehr it is incompetence or it is collussion.
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Anonymous | 5 Jul 2011 2:45 pm
If Miss Ceeney believes firms were at fault who have NOT been told to pay up by the FOS (i.e they colluded with anotehr party), then as the FOS is NOT a legal system and there is no burden of proof, why doesn't she do what the FOS does to IFAs and accept OUR hearsay and penalise those she believes on the balance of probabilities were guilty, but not accussed and set an example?
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