Some firms have still not improved sale practices
The FSA has published the findings of its latest review of Payment Protection Insurance (PPI) selling standards. They show improvements in some areas, but also that many firms are still failing to treat their customers fairly.
Clive Briault, FSA Managing Director of Retail Markets, said: "We have, on a number of occasions, set out clearly our requirements for the selling of PPI. While some progress has been made by the industry, we are extremely disappointed that some firms have still made little progress in improving their sales practices.
"The right PPI can provide valuable protection for consumers, but they are entitled to expect that they will be treated fairly by firms when they buy it. They must be told how this product works, what it covers, and how much it costs. At the moment, too many firms are not meeting these requirements."
He added: "We will now strengthen our action against firms who fail to treat customers fairly when selling PPI."
The FSA's latest review assessed whether firms had made improvements in five key areas. It found improvements found in two areas: the vast majority of firms were now making it clear to customers that PPI was optional; and firms were now offering cancellation refunds on virtually all single premium PPI policies.
However, little or no progress had been made in the other three areas: many firms were still not giving customers clear information about the product and what it will cost; not telling them the extent to which they were eligible for PPI cover and what they were covered for; and not telling them why, where advice was given, the recommended PPI policy met their demands and needs.
The latest review looked at 150 firms, including mystery shopping of personal loan providers. The mystery shopping identified serious failures in the sales processes of a number of firms selling single-premium PPI alongside unsecured personal loans.
As a result four firms will be subject to further investigation and a further 20 cases may also be investigated.
In addition, the following action has already been taken as a result of the FSA visits:
· Eleven firms have stopped selling PPI either permanently or temporarily until such time as they get their sales processes in order and/or retrain staff;
· Three firms have cancelled their FSA authorisation to sell PPI; and
· Four large firms are reviewing past PPI sales to ensure they were appropriate.
In line with its general approach, the FSA is seeking to increase the level of fines where this is warranted by the nature, seriousness and impact of the breach in question, and by the likely impact on deterrence. Firms have been given due warning of their obligations to treat their customers fairly, both generally and on PPI in particular. Consequently, the FSA will now seek to impose higher fines for firms in the PPI market where standards fall below the required level.
Work will continue with further firm visits and mystery shopping and focussed work on issues that cut across the PPI market. Our rules are also currently under review.