FSA confirms measures to reform PPI market and protect consumers

[Amethyst]

FSA confirms measures to reform PPI market and protect consumers


Dan Waters

.. with this package of measures we’re confident we can mend a market that has been broken for too long.




FSA/PN/132/2010
10 August 2010
The Financial Services Authority (FSA) today published a policy statement confirming its package of measures to protect consumers in the Payment Protection Insurance (PPI) market.
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.

Firms must implement the measures by 1st December 2010, with the time in between 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.
Dan Waters, the FSA’s director of conduct risk, said:
"Today is the culmination of months of hard work and now, with these measures, we look forward to consumers being treated fairly whether they are buying or complaining about PPI.
"Since we took over the regulation of PPI we’ve carried out 24 investigations and three thematic reviews, issued warnings, halted the selling of single premium PPI with unsecured personal loans, visited over 200 firms, and handed out some very significant fines. Now, with this package of measures we’re confident we can mend a market that has been broken for too long.
"This remedy is fair to consumers and the industry alike. The onus is now on the industry to ensure it treats all customers fairly. We will be monitoring the implementation of our guidance closely to ensure real change is delivered."
The policy statement follows consultation that saw significant levels of highly detailed feedback from PPI providers, sellers, trade groups and consumer bodies.
The measures follow up on the FSA’s commitment to reform the market and build on the agreement the FSA secured from the industry in 2009 to stop selling single premium PPI on unsecured loans. The FSA has also taken action against 24 firms and individuals for PPI failings with fines totalling approximately £13 million.
Notes for editors

1. The FSA has published a policy statement.
2. The FSA outlined its reforms for the PPI market in consultation papers 09/23 and 10/06.
3. In February 2009 the FSA halted the selling of single premium PPI sales on unsecured loans by writing to chief executives requesting its removal from the marketplace.
4. The FSA has taken action against 24 firms for failings in relation to PPI sales with fines totalling nearly £13 million. This includes the FSA’s largest fine in the retail sector on Alliance & Leicester which was fined £7m in October 2008 for serious failings in its telephone PPI sales.
5. 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.
6. The FSA regulates the financial services industry and has five objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.

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Re: FSA confirms measures to reform PPI market and protect consumers

Peter Vicary-Smith, chief executive at Which? said: “For years, the industry has handled poorly thousands of PPI complaints so it’s important that the FSA is able to force firms to review old cases.
“We want the Government to act swiftly and activate the FSA’s power to force lenders to review rejected PPI cases so consumers whose complaints were wrongly dismissed can get the redress they are due.