Trade bodies respond to PPI criticism

Financial service trade associations have hit back at Financial Services Authority (FSA) criticism of the sale of payment protection insurance.


The FSA called on the industry to tighten up its sales practices after uncovering evidence of lack of proper compliance controls and poor selling regimes during a series of visits and mystery shopping exercises among firms selling PPI products.


Inspectors will return next year to ensure that improvements have been made. Meanwhile the FSA has called for meetings with trade associations to draw up improvement plans.


In a joint statement, the Association of British Insurers, APACS and the British Bankers Association, said they took the FSA's concerns seriously but warned the report should not be seen as indicative of the whole industry.


According to the three trade bodies, millions of customers benefit from PPI protection, with more than 500,000 claims paid last year.
ABI director general, Stephen Haddrill, said: "Payment protection insurance is a valuable product. Insurers and lenders are committed to driving up selling standards. We will look closely at the particular concerns highlighted by the FSA, and will discuss these with them, as well as discussing our own improvements.


In particular, we want to 'raise the bar' to ensure there is a good basic policy standard that all customers can rely on. We are also working on developing better communication between insurers, lenders and customers to ensure repayment is not sought while claims are being processed."