The FSA has today published the findings of its latest review of Payment Protection Insurance (PPI) selling standards. They show improvements in some areas, but also that many firms are still failing to treat their customers fairly.
The FSA's latest review assessed whether firms had made improvements in five key areas. The FSA has found that improvements have been made in two of these areas: the vast majority of firms are now making it clear to customers that PPI is optional; and firms are now offering cancellation refunds on virtually all single premium PPI policies. However, little progress has been made in the remaining three areas: many firms are still not giving customers clear information about the product and what it will cost; not telling them the extent to which they are eligible for PPI cover and what they are covered for; and not telling them why, where advice is given, the recommended PPI policy meets their demands and needs.
The FSA expects firms operating in the PPI market to meet the Principles and rules when selling to customers. The FSA commissioned a mystery shopping review of unsecured personal loan providers to investigate the extent to which firms had improved their selling practices.
The FSA found that:
- There had been improvements in making it clear that PPI is optional and providing refunds on nearly all single-premium policies. However, many firms are still not giving customers clear information about the product and what it will cost.
- Around two thirds of the firms visited and nearly all of the firms mystery shopped failed to meet the ICOB requirements.
- Around a third of firms visited and less than half of the firms mystery shopped failed to ensure that customers are given the basic information necessary to make an informed decision about PPI.
- Many PPI products do not appear to be designed to meet the needs of the customers to whom they are sold. The FSA now expects firms to review its guidance on the product design process. Following this review firms should look at their existing products to see if they meet customers’ needs.
The FSA has decided to conduct further mystery shopping on firms to collect more information on PPI sales
For further information: FSA publishes results of thematic review on PPI