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FSCS will target insurers for compensation over PPI’s scandal
http://www.accident-reporting.com/fs...0%99s-scandal/
With debate still raging over who is really responsible for the shambles involving mis-sold PPI’s, the Financial Services Compensation Scheme (FSCS) has confirmed that it will be pursing insurers for compensation.
Following the High Court ruling earlier this week – which held members of the British Bankers Association liable for mis-selling insurance to millions of consumers, the FSCS has decided that insurers should be held accountable and they will be seeking recoveries from third parties where possible.
The broker trade body has agreed that in circumstances where brokers have acted as agents for the insurer, it should be left up to the FSCS to decide whether it is economically viable for the claim to be pursued. So far, there has been no confirmation from the company that any insurers are in line to face legal action, but a spokeswoman stated that they would be considering all potential avenues for recovery and are open to pursuing them if needs be.
Mike Cranny, a regulatory compliance consultant, is happy that insurers could be facing punitive action, but pointed out that there was little scope to chase up individuals who have been selling policies on behalf of the insurance companies. He also said that it seemed obvious that many PPI’s were sold without acceptable information being impressed upon the individual purchasing the policy, and that insurers were slow to act when complaints were raised, citing that ‘distribution channels were not chosen wisely’.
Mr Cranny is not alone in his thinking; many other insurance executives take the stance that the banks were greedy and are now getting their comeuppance for treating their customers dishonestly. In many cases, the banks and building societies have looked past customer service and only considered maximising sales, with no thought for later consequences.
It is still unknown whether the British Bankers Association will appeal the FSA’s decision, but if they bow to the ruling, they could be liable for in excess of £4.5billion. However, there are some rumbling concerns among brokers that not only could there be an enormous pay out, but insurance costs may spiral and they could be left with an indefinite number of claimants expecting their money back, bringing the compensation culture to the forefront of people’s minds.
http://www.accident-reporting.com/fs...0%99s-scandal/
With debate still raging over who is really responsible for the shambles involving mis-sold PPI’s, the Financial Services Compensation Scheme (FSCS) has confirmed that it will be pursing insurers for compensation.
Following the High Court ruling earlier this week – which held members of the British Bankers Association liable for mis-selling insurance to millions of consumers, the FSCS has decided that insurers should be held accountable and they will be seeking recoveries from third parties where possible.
The broker trade body has agreed that in circumstances where brokers have acted as agents for the insurer, it should be left up to the FSCS to decide whether it is economically viable for the claim to be pursued. So far, there has been no confirmation from the company that any insurers are in line to face legal action, but a spokeswoman stated that they would be considering all potential avenues for recovery and are open to pursuing them if needs be.
Mike Cranny, a regulatory compliance consultant, is happy that insurers could be facing punitive action, but pointed out that there was little scope to chase up individuals who have been selling policies on behalf of the insurance companies. He also said that it seemed obvious that many PPI’s were sold without acceptable information being impressed upon the individual purchasing the policy, and that insurers were slow to act when complaints were raised, citing that ‘distribution channels were not chosen wisely’.
Mr Cranny is not alone in his thinking; many other insurance executives take the stance that the banks were greedy and are now getting their comeuppance for treating their customers dishonestly. In many cases, the banks and building societies have looked past customer service and only considered maximising sales, with no thought for later consequences.
It is still unknown whether the British Bankers Association will appeal the FSA’s decision, but if they bow to the ruling, they could be liable for in excess of £4.5billion. However, there are some rumbling concerns among brokers that not only could there be an enormous pay out, but insurance costs may spiral and they could be left with an indefinite number of claimants expecting their money back, bringing the compensation culture to the forefront of people’s minds.
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