27 September 2007
Despite recent changes to the way payment protection insurance (PPI) is sold, many companies are still not making it clear to customers that the product is optional, prompting consumer bodies to state that more needs to be done to ensure a fair deal for the consumer.
In the latest phase of the Financial Services Authority's (FSA) investigation into the selling of PPI, the industry regulator found that 90% of firms are now making it clear to customers that payment protection insurance is optional, with 92% of shoppers being told that they do not have to purchase the product.
However, it also found that little improvement has been made by certain providers on ensuring prices are transparent and on the suitability of customers for PPI policies, with only around two thirds of shoppers being warned about how much payment protection insurance would cost them over the full term of the loan.
Commenting on the outcome of the FSA's third phase of the investigation, Nick White, Director of Personal Finance at uSwitch said: "We can't deny the fact that the investigation into the sale of payment protection insurance is a hugely complex process and there is no quick fix solution.
"However, nearly two years on from phase one, it seems that there are still a series of flaws in the selling practices adopted by the industry which have not been corrected by some PPI providers.
"It is reassuring to see that the FSA will continue to police the issue and is planning to increase fines for those firms that do not comply with the payment protection insurance selling guidelines. The FSA has taken decisive action over the last year, fining a total of ten firms for mis-selling PPI.
"But the question as to whether fines will provide a strong enough deterrent to stop inadequate sales practices remains unanswered," he added.
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