The FSA and Office of Fair Trading have jointly published guidance on short-term income protection products and debt waivers to try and ensure there is no repeat of the payment protection insurance misselling scandal.
Both bodies have issued the guidance after learning that some providers are looking to create new forms of protection which act in a similar way to PPI. The FSA says providers should “take steps to identify a target market” when designing a product, using data and research on similar insurance products and must ensure that those without an income or a need for such insurance are excluded from the target market.
The guidance says: “Provider firms should take active steps to ensure that, as far as possible, the target market is tailored to exclude customers who would be unlikely to experience positive outcomes if they bought the product.”
Plan Money director Peter Chadborn says: “There is a place for these products so it is good now we have guidance for them, as it will distance them from PPI in the eyes of the public.”