Payment protection now has an unfair 'bad odour around it', Payment Shield's Tim Johnson says
Payment Shield chief executive Tim Johnson has urged the FSA to prevent financial intermediaries responsible for mis-selling payment protection insurance (PPI) from operating in the market again.
Insurance Times reported last month that Neville Allport, the former chief executive of Picture Financial Services – the company linked to the greatest number of PPI mis-selling compensation claims in the insurance intermediary sector – is back in business. He is chief executive of Pure Options, a new company offering income protection insurance products.
The explosion of PPI mis-selling claims has fuelled the eightfold increase in general insurance brokers’ Financial Services Compensation Scheme (FSCS) levies. The hike has sparked the Insurance Times campaign Fair Fees for Brokers.
Johnson, whose Towergate-owned company specialises in PPI products, urged the FSA to show greater vigilance. “That’s what the regulators are there for – to weed out those people,” he said.
Speaking exclusively to Insurance Times, he hit out at banks and credit brokers responsible for mis-selling PPI, holding them responsible for tarnishing the image of the payment protection products.
“We take a pretty dim view of them, like most of the payment protection industry,” he said.
“The shame of it is that PPI is a product that people need. But they end up cancelling it when they probably need it most because it has a bad odour around it. This is because people mis-sold it in a certain subsector of a certain market. It wasn’t every product, but the odour lingers.”
He distinguished between Payment Shield products and the PPI sold by banks. “Our product was mortgage PPI as opposed to PPI tied to loans and ours was not sold the way the banks sold it,” he said. “So ours was a different product and a different sell.
“But I’m not sure the public distinguishes between the way that was sold and loan-based PPI, so that [mis-selling] has potentially damaged the product.”
Johnson backed the Fair Fees campaign to cut the levy on GI brokers.
He added that Payment Shield has also been hit by this year’s hike in the FSCS levy. “If the increase has been caused by PPI mis-selling, you could argue that you’ve not mis-sold and you should not be levied,” he said.
Payment Shield has tried to tackle the poor image of PPI through the launch of a product called Income Shield, which is tied to income rather than mortgages or loans.