Firms are failing customers on PPI warns FSA
Chief Executives of firms selling payment protection insurance (PPI) should be making plans to pay significant fines levied against them personally.
The latest round of PPI mystery shopping by the FSA has again produced a set of results and found that firms are simply not giving customers clear information about PPI products includin:; how much they will cost, why they are eligible for the insurance, what they are covered for and how the protection fits in with their own specific needs.
Given that Richard Hayes, chief executive of Hadenglen Home Finance was personally handed down a fine of £49,000 at the beginning of September, alongside the £133,000 fine that was levied against the company, senior management cannot expect to avoid individual sanctioning when their firms are found to be acting improperly.
Giving an update on its thematic review of the PPI market, the FSA said it had referred four firms to Enforcement for further investigation with around 20 more being considered for the same fate.
Some company boards are at least beginning to take the problem seriously and according to the FSA 11 have stopped selling PPI either permanently or temporarily until they can guarantee an improvement in their sales practices and procedures.
However three firms have cancelled their permission to sell PPI after the FSA’s visit with a further four currently carrying out a past business review.
The FSA also highlighted problems with the design of PPI products and is looking for firms to offer more flexible cover, which will work to the advantage of clients.
For those who continue to bury their head in the sand things will only get worse. As the FSA states: “We have decided to - seek to impose higher fines for firms in the PPI market where standards fall below required levels.”