The FSA is calling on firms to take urgent action to ensure the selling of PPI is in line with its regulatory requirements.
The call follows a number of visits and mystery shopping exercises that uncovered poor selling practices and a lack of compliance controls in the sector.
The results of these exercises has revealed some serious cases according to the FSA which will be referred for further investigation with a view to possible enforcement action.
A second round of thematic work early next financial year will be carried out to check that compliance levels have improved. The FSA will also be meeting with the relevant trade associations to discuss their commitment to changing and improving the market.
FSA managing director for retail markets Clive Briault says: “We were pleased to see that sales of regular premium PPI sold with prime mortgages are generally compliant.
“However, compliance standards in other areas of the market, notably single premium PPI business, are generally weak. Those firms where these problems exist must take urgent action to address them.”