Andrew Holt reports on what the CII is doing to ensure that payment protection policies are sold responsibly
The CII is calling on the industry to raise the levels of knowledge and capability of those who sell payment protection insurance (PPI) if it is to avoid adverse comment from the FSA.
PPI has come under heavy criticism from both the FSA and the Office of Fair Trading. The FSA has challenged the industry to improve aspects regarding the sale of these products or face the prospect of the regulator taking action.
The CII has embarked on a contact programme with its corporate customers to outline their training and competence responsibilities and the support that the institute will offer to help ensure that those who sell PPI, and who handle claims, are competent to do so.
Steve Wellard, CII director of communications, says: "The controversy surrounding this class of business is detracting from its many merits. PPI can provide vital protection but it is essential that firms make certain - and are able to demonstrate - that the skills of their people who deal with it are up to date."
The CII has introduced a PPI online support programme especially for firms as a practical aid to regulatory compliance. It provides a 12-month rolling programme including an interactive tutorial programme, random assessments and an optional corporate assessment programme to allow firms to measure levels of knowledge throughout their organisations.
A key aspect of selling PPI is the need to comply with FSA regulations. Within these are specified training and competence requirements. These require staff to be competent to sell PPI products and deal with any claims that come in. And they must be able to demonstrate this competence.
As part of an overall compliance programme, the CII can provide help easily, quickly and cost-effectively. The CII has something of an unrivalled expertise in the development and delivery of financial services regulatory compliance and competence support programmes.
The CII's PPI online support programme is a practical aid to regulatory compliance.
The assessment programme generates random tests so that users can test their knowledge as they progress with their studies.
The optional corporate assessment programme - is a question databank providing the ability to objectively measure levels of knowledge throughout an organisation, ensuring that staff are up-to-date and that any knowledge gaps are addressed within personal development plans.
Organisations in the business of providing or distributing PPI products will be all too aware of the criticisms currently being levied at this class of business: allegations of mis-selling; accusations of poor knowledge levels among sales staff; suggestions that administration is poor.
But the CII is keen to stress this controversy is detracting from the many merits of this class of businesses, which the CII says provides vital protection for a wide range of individuals.
The FSA is currently giving the PPI market the opportunity to put its own house in order. It wants to see standards raised and customers given a better deal. In a large part that means raising levels of knowledge and capability among your people.
It has set the payment protection insurance industry a 17 March deadline to get its house in order or have the FSA do it for it.
The FSA wishes to see improvements to what it deems market failure issues related to insurance conduct of business (ICOB) compliance, transparency and product choice.
Failing industry self-reform, the FSA will impose its own corrective actions. These could include measures to separate the sale of insurance from core products; or at least better clarify sales processes.
The Citizens Advice Bureau (CAB) has also warned that PPI is a particular problem for the most vulnerable borrowers, who are also the people most at risk of running into financial difficulties.
CAB research found that 85% of CAB clients who had claimed on PPI had been unsuccessful - in sharp contrast with industry assertions that only 15% of claims are turned down.
Evidence from 270 Citizens Advice Bureaux said that in many cases PPI is more about providing an additional source of profit for the financial industry than about protecting consumers.
CAB claims that problems occur in nearly all sectors of the consumer credit market - from non-status mortgage lenders and hire purchase companies to major high street banks and credit card companies. IT
What do you know about PPI?
Q1. What is a specific requirement for pay ment protection insurance?
Q.2 Applicants for payment protection insurance must satisfy the insurer that they meet certain.... What are these called?
Q3. What impact has the Access to Medical Reports Act  had on the processing of payment protection insurance claims?.
Q4. What actions do payment protection insurers take to guard against fraudulent claims?
Q5. What waiting period is commonly applied to payment protection insurance on personal loans?
A1. That the applicant is over 18
A2. Eligibility requirements
A3. It has required insurers to gain a customer's permission before they can obtain medical reports about them from their usual doctor
A4. Record all new claims with a central claims register to see if that customer has other similar claims
A5. 30 days excess