PPI: UK FSA publishes report on Payment Protection Insurance
The UK's Financial Services Authority has today published a report on the assessment and redress of Payment Protection Insurance.
The FSA has published a package of measures in the form of a policy statement intending to protect consumers in the Payment Protection Insurance (PPI) market.
According to the FSA "The package will ensure customers are treated more fairly when complaining about PPI and better when buying the product; it includes:
- new handbook guidance to ensure complaints are handled properly, and redressed fairly where appropriate;
- an explanation of when and why firms should analyse their past complaints to identify if there are serious flaws in sales practices that may have affected complainants and even non-complainants; and
- an open letter setting out common sales failings to help firms identify bad practice."
Regulated businesses must must implement the measures by 1st December 2010. The FSA is uncompromising with the deadline saying that "the time in between [is sufficient] to prepare for implementation such as training staff to a higher level. The FSA will be monitoring firms closely to ensure the new standards are adhered to."
In February 2009 the FSA halted the selling of single premium PPI sales on unsecured loans.
The FSA has taken action against 24 firms for failings in relation to PPI sales with fines totalling nearly GBP13 million. This includes the FSA’s largest fine in the retail sector on Alliance & Leicester which was ordered to pay GBP7m in October 2008 for serious failings in its telephone PPI sales.
The industry's record on complaints handling is not good: FSA data (received from 18 major sellers of PPI) shows that on average, firms reject almost half of the PPI complaints they receive but some reject nearly all. Around 30% of rejected complaints go on to the Financial Ombudsman Service, where more than 80% are overturned in the consumer’s favour.
The policy statement is at http://www.fsa.gov.uk/pubs/policy/ps10_12.pdf (large pdf file: 150 + pages)
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