FSA warns firms on PPI practices
Visits and mystery shopping by the FSA uncovered poor selling practices and lack of proper compliance controls among sample firms. Detailed feedback will be sent to companies selling PPI and insurers that provide the policies who will need to address the problems raised.
More serious cases will be referred for investigation and possible enforcement action. The FSA plans a second review early next financial year to check compliance levels have improved.
Clive Briault, FSA managing director, said: “When properly structured, explained and sold, PPI can provide worthwhile cover for consumers against unexpected changes in their personal circumstances. We were therefore pleased to see sales of regular premium PPI with prime mortgages are generally compliant.
“Compliance standards in other areas of the market, notably single premium PPI business, are generally weak. Where these problems exist firms must take urgent action to address them. This poses a serious risk to consumers because of the poor disclosure of product and price details, the possibility that consumers may not be eligible to claim against their policies and the fact consumers may not be aware they could receive little money back if they cancel policies early.”
Stephen Haddrill, director-general of the Association of British Insurers (ABI), said: “We will look closely at the concerns highlighted by the FSA and will discuss these with it as well as discussing our own improvements. We want to raise the bar to ensure there is a good basic policy standard that all customers can rely on.
“We’re also working on developing better communication between insurers, lenders and customers to ensure repayment is not sought while claims are being processed.”