The Financial Services Authority is making a range of reforms to payment protection insurance with the aim of protecting customers.
The package is intended to ensure customers are treated more fairly when complaining about PPI and better when buying the product.
The reforms include a new guidance handbook 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 December 1 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.
The policy statement highlighted second charge mortgage PPI markets as an area of weakness.
But the FSA adds that it has fewer concerns about the sales of regular premium first charge mortgage PPI, and that so far, the number of complaints about this PPI, and the proportion of them rejected by firms but overturned by the
FOS, is relatively lower than for other PPI types.
Dan Waters, the FSA’s director of conduct risk, says: “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.