FSA continues PPI campaign

by Gill Montia

Story link: FSA continues PPI campaign

The Financial Services Authority (FSA) has once again raised concerns about the sale of Payment Protection Insurance (PPI).

The Authority believes that many firms selling this form of insurance are not giving clear information about the cost of PPI policies or what they cover.

As a result of its latest investigations, the regulator has banned 11 firms from selling PPI, either permanently or temporarily.

The watchdog is also proposing to increase fines for businesses that fail to meet its standards.

The FSA has been monitoring the way PPI is sold since 2005, and its actions have resulted in substantial fines for five companies.

GE Capital Bank paid a £610,000 penalty for failing to have adequate systems and controls for selling insurance which includes PPI, and for failing to treat its customers fairly.

Loans.co.uk has been charged £455,000 for its misdemeanours; the regulator found that the company did not have appropriate systems and controls in place to minimise the risk of unsuitable sales.

PPI is usually sold alongside loans, credit card agreements and mortgages, to provide cover for repayments if borrowers are unable to work due to an accident, illness or the loss of their job.

Consumers are being advised to shop around for such insurance, as some lenders will charge £25 a month to cover repayments on a £5,000 loan over three years.