Insurer claims move stands in breach of TCF regulations.

Companies selling Payment Protection Insurance over the internet are ignoring the FSA's new guidelines on Treating Customers Fairly (TCF), according to Simon Burgess from independent provider British Insurance.

The FSA revised its Insurance Conduct of Business (ICOB) rules in January this year and introduced a new requirement asking firms to take reasonable steps to ensure customers are eligible to claim under the terms of the protection offered.

As well as scrutinising customers’ eligibility prior to the product sale, providers were asked to advise purchasers if they were unable to claim under one or more elements of the policy.

The FSA set a deadline of 6 July to comply, but according to Burgess, the 12 sites he randomly checked ignored this ruling. He comments: “None of the sites I viewed have amended their sales process to meet the FSA’s latest rule change.”

He commented that to conform, firms need only produce an eligibility document advising potential purchasers of their suitability for the product and ask customers to tick a box stating that they have read and understood the listing. “People should not be allowed to buy PPI unless they’ve gone through this process.”

The FSA also requested providers remind customers of their right to cancel within 30 days (increased from 14) and disclose the total price of cover plus interest on a single premium policy. Burgess expressed doubt over whether companies were complying with this requirement.

He added: “Yet again, the majority of PPI providers are flouting FSA rules and as a result, opening the floodgates for more compensation claims, increasing the number of complaints to the Financial Ombudsman Service and further damaging the reputation of the more ethical providers in this sector.”

Burgess expressed his hope that the FSA would react accordingly due to the impact of such behaviour on consumer confidence, leading to potential reluctance from purchasers to obtain cover.