Providers of mortgage payment protection insurance have refunded a total of around £40m to consumers as part of redress measures agreed with the FSA last year.
The FSA entered into an agreement with MPPI firms in October 2009 after the regulator raised concerns about the fairness of contract terms which allowed increases in premiums and reductions in cover.
The regulator originally estimated the redress package would include refunds of around £60m.
Former FSA managing director of retail markets Jon Pain wrote to the Association of British Insurers, the Building Societies Association, the Council of Mortgage Lenders, and the British Bankers’ Association in October 2009 setting out the terms of the agreement reached.
It required MPPI firms to refund increases in premium and restore reductions in cover since January 1 2009 for all existing and past customers for all policies, regardless of when consumers were sold the policy.
Under the terms of the agreement. firms had to pay the refunds by no later than June 30, 2010.
The FSA says surveyed firms have now confirmed they have refunded increases in premiums totalling around £40m, and reversed any reductions in cover, for customers who experienced these changes to their policy in 2009.
Firms have also showed the FSA improved upfront disclosure of cancellation and variation terms, and amended their variation terms to ensure all customers know when firms can vary premiums and cover.
The FSA says in many cases firms have also extended the period of notice of cancellation.
The FSA says: “In view of the positive response by the industry, we are not planning any further steps or action at this time. However, we will continue to keep a watching brief and a high-level review will be conducted in 12 to 18 months time.
“We are committed to ensuring that MPPI customers have fair and adequately disclosed cancellation and variation terms that give clarity about when and why firms may alter their insurance premiums and terms of cover.”