FSA to Step Up Crackdown On PPI
The FSA (Financial Services Authority) is to intensify its crackdown on PPI (payment Protection Insurance) by widening its net of firms to be investigated and by using mystery shoppers.
Despite investigating PPI for two years some firms selling the controversial insurance have so far eluded the FSA's scrutiny. The insurance is sold alongside personal loans to cover repayments in case of illness or redundancy, for example.
As part of the crackdown, the FSA will use mystery shoppers to make undercover visits to firms selling the insurance.
Whilst their investigations have mainly concentrated on firms such as banks and loan companies, the financial watchdog will now concentrate its efforts on other firms who sell smaller volumes of the insurance, such as electrical and car retailers.
The two-year investigation into PPI was prompted by many financial experts and consumer watchdogs feeling many firms, including banks and loan companies were unscrupulous when it came to selling the policies. Many customers have taken out PPI without fully understanding the true cost of the policy and what it covered and did not cover. Many policies were found to be overly expensive while covering the customer for very little. Many customers were also sold the policies unaware that they weren’t compulsory.
The FSA's managing director of retail Markets, Clive Briault, said: "Customers should come away from the sale having been given the best possible chance of understanding that PPI is almost always optional, what the policy will and will not cover and how much it costs. The next phase of our programme will tell us what progress has been made and what further action is necessary."
The FSA hope that by the end of June this year it will have visited over 200 UK firms who sell the policies. Current investigations have so far resulted in ten firms being recommended for further action to be taken with regards to PPI.
Alisdair Milton
1st January 2007
More Information:
If you have payment protection on any personal loans that you may have made, did you know that you could be paying upwards of £2000 on top of the original debt including the interest?
External Links:
