Daily Insurance Industry News
 
 
Daily Insurance Industry News
Sunday 18th of November 2018
September 30, 2009

No hiding place for PPI mis-sellers

by Gill Montia

Story link: No hiding place for PPI mis-sellers

The day of reckoning has arrived for lenders who mis-sold single premium payment protection insurance (PPI) alongside unsecured loans and credit card agreements, and then tossed aside consumer complaints about their practices.

The Financial Services Authority has announced “a package of tough measures” which it says will “tackle the key issue that too many complaints are rejected by firms and then overturned by the Financial Ombudsman Service in favour of the consumer”.

Lenders have therefore agreed to review their sales and redress those consumers identified as mis-sold.

To make sure they don’t lose interest in the task, a new rule to be introduced by the regulator by the end of the year will require firms to reopen some 185,000 previously rejected PPI complaints.

The sale of single premium PPI alongside unsecured loans was banned in May because this method of selling the insurance involved the premium for the entire life of a loan being added to the debt, making it liable for interest.

In addition, consumers complained of feeling pressurised into buying the cover, believing they would not secure credit without taking up the lenders’ PPI.

The pressure is unlikely to have been imagined; in 2007, the Competition Commission undertook a review of the PPI market and concluded: “The personal loans business has suffered from declining profits in recent years to the point where in 2006, it appears to have been loss making before taking into account income from PPI.”

 

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