View more on these topics

FSA uncovers more PPI failings

Some firms selling payment protection insurance are still failing to treat their customers fairly, according to the latest FSA review.

While a number of firms have improved their sales standards over the past year, the FSA says visits to 40 firms show there are still three key areas of widespread concern.

Many firms are still not giving customers clear information during the sales conversation, according the review. It is not being made clear that PPI is optional and customers are not getting full information about how much the insurance will cost.

The FSA says customers are still not being made fully aware there may be parts of the policy under which they cannot claim. Some firms are still failing to establish that the PPI policies they recommend are suitable because they are not collecting sufficient information from the customer.

Where customers are sold single premium policies, this is not always done with the best interests of the customer in mind – for example, where a choice between a regular or single premium is available, the sales conversation may be biased towards the single premium policy when the customer’s circumstances suggest this is not the most suitable option.

The study identified particularly poor standards among some secondary PPI providers, such as motor dealers and retailers.

The FSA has this year secured undertakings from firms and the agreement of trade associations to make the practice surrounding refunds on cancelled single premium PPI policies fairer and more transparent to customers.

It says it will follow-up “urgent remedial programmes” with a number of firms to improve their sales standards and will continue to pursue formal disciplinary action against firms who fall well below the required standards. The FSA will conduct further work next year to ensure that senior management are addressing the areas of concern and embedding the behaviours and standards expected.

The FSA is considering, as part of the existing wider review of the effectiveness of the regulatory regime for general insurance products, whether new rules are required in the area of PPI sales. It plans to publish a report on this wider review in Q1 2007 with any resulting changes coming into effect in Q4 2007.

FSA managing director of retail markets Clive Briault says:
“As we have made clear before, when sold properly PPI can provide valuable protection against changes in personal circumstances. But despite some improvements in standards, major weaknesses remain which go to the heart of the culture surrounding PPI sales.

“The bottom line is that customers should come away from the sale having been given the best possible chance of understanding that PPI is optional, what the policy will and will not cover and how much it costs. On the strength of our findings, the industry has further to go to demonstrate that customers really are being treated fairly in this market.

“There are also important messages here for consumers. They should be prepared to ask straightforward questions of sales staff when PPI is mentioned and we are publishing some top tips on this to help them to identify whether PPI is right for them.”

Recommended

HSBC launches LTC service

HSBC is launching a comprehensive long term care advice service, providing customers with specialist advice on funding immediate and future LTC needs. Since HSBC has acquired the Nursing Homes Fees Agency, it ensures the bank can provide customers with a unique service offering free and fully qualified financial and legal advice on all aspects of […]

Full Marx for tragedy

Back in my youth, I used to read the odd bit of Karl Marx. It was Marx who remarked that historical events have a way of repeating themselves, “the first time as tragedy, the second as farce.”

FSA in MVR move to give equal deal to policyholders

The FSA is proposing moves to cut out any preferential treatment of shareholders over with-profits policyholders when market value reductions are applied. The move could see policyholders benefit from redistribution that could boost their plans by up to 3 per cent. The FSA says it wants to make the proposed revision to the handbook after […]

In-Partnership sets up mortgage arm

In-Partnership has set up a mortgage arm. INnovate Mortgages promises members higher proc fees and improved service levels.

Time to stop the salami slicing on tax relief

Steve Webb  – Director of Policy and External Communications As the Autumn Statement approaches, Steve Webb calls for the Government to stop tinkering with tax relief. Twice a year, in the run-up to the Spring Budget and the Autumn Statement, we face a torrent of speculation as to what changes the Chancellor might make to […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com