PPI investigation moved forward by Financial Services Authority

Over recent months the UK has seen payment protection insurance take a great deal of flack from financial experts. This type of insurance cover, sold by companies as part of financial packages such as loans and credit cards, has been at the centre of controversy, with many people including MPs, the Office of Fair Trading, and the Financial Services Authority, expressing concerns over the suitability of many payment protection insurance plans, and expressing further concerns that consumers were getting a raw deal after being talked into taking out PPI that would not benefit them.

The Financial Services Authority has been investigating the whole issue surrounding PPI and has reportedly been gearing up to sue a number of major lenders in connection with mis-sales of PPI. The FSA is also taking its investigation into PPI to the next stage according to reports, and has moved forward into phase three of its investigation into PPI. The payment protection insurance market is thought to be worth around five and a half billion pounds, but concerns have been rife with regards to the hard sell of these products by lenders, and the mis-sale of the policies to consumers that can never actually benefit from them.

As part of the third phase of the investigation mystery shoppers will be used to help look into the process involving the sales and the effectiveness of PPI products. However, although Clive Briault, the FSA's managing director of retail markets stated that : "Improving sales standards in the PPI market remains a key priority", the consumer group Which? stated: "industry measures to give consumers more information will be too little too late".

The sales and the monitoring of PPI products is expected to be assessed by the FSA following the completion of the investigation.

Tom Smith
3rd February 2007