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.”