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UK regulator completes review of Payment Protection Insurance

FSA completes review of Payment Protection Insurance

The FSA has completed the final stage of consultations on its proposals for regulation of the Payment Protection Insurance (PPI) market. PPI covers consumers against being unable to pay off loans because of sickness, unemployment or other circumstances that might affect their ability to service the debt.

Despite opposition from the credit industry the FSA has stood by its earlier proposals to insist that lenders improve their complaints handling and provide redress for people who were previously mis-sold PPI. The FSA action comes in response to a high number of consumer complaints regarding PPI to the Financial Ombudsman. The FSA notes that though many firms would reject 100% of claims made – producing over 158,000 complaints in 2008 - but that 80% of consumers who complained to the Financial Ombudsman had their claims approved.

Firms selling PPI were accused by the FSA of improper selling practices, most commonly not considering whether it would meet the consumer’s needs, of not investigating claims seriously and insufficiently redressing claimants. The selling of often-overpriced PPI alongside personal loans, mortgages or credit cards has already been banned by the Competition Commission. The FSA also intervened to impose £11.8m of fines on firms mis-selling PPI.

More information on PPI can be found here:

www.guardian.co.uk/money/2010/may/14/competition-commission-ppi-sale-ban

More information from the final stage of consultation on the FSA Proposals can be found here:

www.fsa.gov.uk/pages/Library/Policy/Policy/2010/10_12.shtml


ID: 46033
Publication date: 16/09/10
   
 

Created: 17/09/10. Last changed: 20/09/10.
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