In September 2009, the FSA consulted upon the assessment and redress of payment protection insurance complaints (CP09/23). The proposals in CP09/23 stemmed from FSA concerns regarding sales of payment protection insurance (PPI) products and the fairness with which firms have assessed the growing amount of consumer PPI sales complaints.

In CP09/23 the FSA consulted upon:

  • Handbook guidance concerning the fair assessment and redress of PPI complaints;
  • the introduction of Handbook rules requiring the re-assessment of all previously rejected PPI complains made since January 2005; and
  • where firms have identified (following root cause analysis of complaints) failings in their PPI sales practices, the FSA maintained that - in the light of Principle 6 "a firm must pay due regard to the interests of its customers and treat them fairly" - firms should consider the position of non-complainant customers to determine whether a wider redress programme is called for.

Responses to the proposals in CP09/23 varied widely between consumer representatives and industry bodies. The latter have been highly critical of the proposals.

In CP10/6 the FSA recognises that the costs (and benefits) and resulting industry wide impact of its proposals were much higher than had been determined in CP09/23. Furthermore, in the light of industry responses, the FSA has addressed certain concerns where it believed these were well founded. Amendments include giving the industry more time to implement the proposed measures and a revised cost-benefit analysis of the complaint handling guidance.

The FSA will consult on the package of measures for a further six weeks. However, in CP10/6 the FSA states that it will “remain minded to consider that our package is a fair, proportionate and appropriate one which is needed to improve customer outcomes”.

The FSA has decided not to include in CP10/6 the rejected PPI complaint review rule which it had proposed in CP09/23. The regulator will wait until its powers are clarified under the Financial Services Bill before decided how to proceed on this matter.

The consultation will close on 22 April 2010. Interested parties are asked to make only new points in relation to the package of proposals and not to repeat arguments made in the consultation to CP09/23.

For further information: Consultation Paper 10/6: The assessment and redress of Payment Protection Insurance Complaints, Feedback on CP09/23 and further consultation.