Payment protection insurance sellers are still failing to treat their customers fairly, according to the FSA.

The regulator said that while a number of firms have improved their sales standards over the past year, visits to 40 firms show there are still three key areas of widespread concern.

The FSA said these can result in customers being unable to make an informed decision about taking out PPI cover.

The FSA said key findings were:

  • Many firms are still not giving customers clear information during the sales conversation. It is not being made clear that PPI is optional and customers are not getting full information about how much the insurance will cost.

  • Customers are still not being made fully aware that there may be parts of the policy under which they cannot claim. Furthermore, some firms are still failing to establish that the PPI policies they recommend are suitable because they are not collecting sufficient information from the customer – for example, about any existing cover they possess.

  • Where customers are sold single premium policies, this is not always done with the best interests of the customer in mind – for example, where a choice between a regular or single premium is available, the sales conversation may be biased towards the single premium policy when the customer's circumstances suggest this is not the most suitable option.

    FSA managing director of retail markets Clive Briault said: "As we have made clear before, when sold properly PPI can provide valuable protection against changes in personal circumstances. But despite some improvements in standards, major weaknesses remain which go to the heart of the culture surrounding PPI sales.

    "The bottom line is that customers should come away from the sale having been given the best possible chance of understanding that PPI is optional, what the policy will and will not cover and how much it costs. On the strength of our findings, the industry has further to go to demonstrate that customers really are being treated fairly in this market.

    The study also identified particularly poor standards among some firms, such as motor dealers and retailers, for whom the sale of PPI is a minor activity relative to their main business.

    The regulator said it will follow-up urgent remedial programmes with a number of firms to improve their sales standards and will continue to pursue formal disciplinary action against firms who fall well below the required standards.

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