Past complaints must be reinvestigated and settled by firms
The Financial Services Authority (FSA) has done a voluntary deal with payment protection insurance (PPI) sellers to review past sales and compensate mis-sold customers.
It said firms representing more than 40% of face-to-face sales in the Single Premium Unsecured Personal Loan PPI market have agreed to review past sales.
And it said ongoing supervisory action continues with the rest of this market place.
To tackle the large number of complaints to the Financial Services Ombudsman the FSA has:
- Issued new guidance (due to take effect by the end of the year) to ensure PPI complaints are handled properly, and redressed fairly where appropriate
- Brought in a new rule will require firms to reopen some 185,000 previously rejected PPI complaints and reassess them against the guidance.
- Begun a targeted assessment of sales practices for PPI on secured loans and credit cards; if the potential for mis-selling is identified, pro-active reviews by firms may be extended to these areas too.
Jon Pain, FSA managing director of retail markets, said: "Consumers should not be pressured or deceived into buying PPI and they are entitled to have a policy properly explained to them.
“It is unacceptable that despite previous warnings about poor sales practices, backed by 22 enforcement cases and significant fines, the PPI sector still needs the FSA to intervene on this.
"And the outcome of a complaint about a PPI sale should not depend on whether or not the complainant persists past the firm on to the FOS.
Industry must act
"The industry must show it can act fairly, consistently and in the best interest of consumers on PPI. All firms operating in this sector should take note and where necessary get their house in order.
“Where we find problems in PPI sales or complaint handling, firms can expect tough action, including requiring them to undertake reviews and, where appropriate, pay redress."
Bigger fines needed
Louise Hanson, head of campaigns at consumer group Which? said: “While it's good to see the FSA make firms review cases they've wrongly dismissed, we're concerned about loopholes. Consumers could still be left paying over the odds or with too little compensation, so the FSA needs to monitor the review process closely.
"The FSA must also take stronger enforcement action against firms with bad complaints handling. It's not enough to tell them to go back and do better the second time round.
“Unless big fines are levied, businesses will keep on unfairly dismissing complaints, safe in the knowledge that if they get caught, all they'll have to do is go back and look at them again.
"PPI isn't the only area where FSA action is needed - the Ombudsman's complaint statistics show too many firms selling a range of different products, which have had a higher-than-average number of complaints upheld against them.
“The FSA must take swift action to get these firms to review their cases, to improve the industry's attitude to complaints handling."
Still more to do
Adam Phillips Chairman of the Financial Services Consumer Panel (FSCP) said: "The selling of PPI has a notorious history. We welcome the FSA's proposal today to force firms to re-visit all rejected complaints about sales of PPI and re-examine them against new FSA guidance.
“However, this action has taken a long time, and the FSA still needs to tackle PPI sold with credit cards, secured loans and mortgages where people may not have complained.
“We also still await FSA enforcement action against individuals in some of the bigger players who were responsible for the mis-selling of PPI."
The British Bankers’ Association (BBA) said it was still working on a full response.