PPI firms knew of problems but did not resolve them, says FSA
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Speaking at the Association of Finance Brokers' annual dinner last week, Jon Pain, managing director of retail markets at the FSA, told attendees that known problems in the PPI market were not rectified by some providers.
Pain says: "It's abundantly clear that many providers and distributors were aware of issues that needed to be resolved long ago but did little about it."
Pain says the FSA's objective is to make the product fairer for consumers, and it has set out five outcomes it expects companies to deliver.
These include ensuring customers are told that PPI is optional and that they are given clear information about products and what they will cost.
Pain adds: "It's clear that this has not always been the case. We have published 20 enforcement cases addressing PPI failings and requiring redress for consumers who have suffered detriment. This includes one of our largest ever fines - £7m against Alliance & Leicester."
He says the FSA has found instances whereby customers may be ineligible to make claims on policies. It has also seen cases in which clients are not given enough information to spot that, in single premium sales, they will pay interest on their extra borrowing.
In February Pain wrote to firms still selling single premium PPI asking them to withdraw the product as soon as possible.
He adds: "It's clear that the single premium PPI market was where most risk for consumer detriment arose and we endorsed the move by the market to withdraw the product.
"We would welcome a properly sold monthly variant of PPI that is less complicated."
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