FSA update on PPI reforms - 09 March 2010

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FSA update on PPI reforms:

http://www.fsa.gov.uk/pages/Library/Com ... /039.shtml



FSA/PN/039/2010
09 March 2010

The Financial Services Authority (FSA) today published feedback to its plans to reform the Payment Protection Insurance (PPI) market and announced a further six week consultation on its revised package of measures.
In response to its consultation (CP 09/23), the FSA received 51 detailed responses from a wide range of stakeholders. Consumer groups were very supportive of the proposals but PPI providers and industry groups were highly critical.

As a result of this detailed feedback, there have been some revisions to the original proposals which, in the FSA’s view, warrant a further short consultation. For example, the wider costs and consumer benefits have altered since the original consultation and the FSA wants to test the revised financial assumptions with firms.

The FSA’s proposed package of measures is designed to ensure customers are treated consistently and fairly, either when buying new PPI policies or making a complaint about an existing one.

Dan Waters, the FSA’s director of conduct risk, commented:

“We’re disappointed that the industry has responded so critically to our proposals but we remain 100 per cent committed to bringing about genuine, lasting change in the PPI market. We do, however, recognise the importance in ensuring that genuine concerns have been listened to.

“Our commitment, nevertheless, is evidenced by the fact that we have halted single premium PPI sales, taken enforcement action against 23 firms, issued two ‘Dear CEO’ letters, undertaken three thematic reviews, conducted numerous mystery shops, and visited over 200 PPI providers. We remain firmly of the view that the PPI market is broken and needs to be fixed.”

The FSA invites further comments on its proposals, and responses must be received by 22 April 2010.

Notes for editors
Consultation Paper 10/6.
Consultation Paper 09/23.
In February 2009 the FSA halted the selling of single premium PPI sales on unsecured loans by writing to chief executives requesting its removal from the marketplace. It has also taken enforcement action relating to PPI against 23 firms, resulting in fines totalling nearly £13 million.
The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.