down, the sales methods employed in the UK’s £5 billion ($9
billion) annual premium payment protection insurance (PPI) remain
far from acceptable.
This conclusion was drawn by the Financial Services Authority
(FSA) following a mystery shopping exercise it conducted to assess
customer experiences of face-to-face branch sales of single premium
PPI when sold alongside an unsecured personal loan.
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The results of the mystery shopping exercise revealed:
• Very few customers were told that the cost of PPI would be added
to the loan as a single premium and that interest would be charged
on this amount;
• Only half of customers said that they were told about the key
limitations and exclusions of the policy; and
• Many customers were not told of both the monthly cost and total
cost of their PPI.
“Tackling poor PPI sales practices remains a high priority for the
FSA,” said Jon Pain, MD of the FSA’s Retail Markets. “We will
intervene to ensure consumers are protected and are considering
what regulatory powers are the most appropriate to deliver fair
outcomes.”
The FSA’s PPI market review is the third in a series that began in
2005, and consumer activist group Which? believes it indicates that
strong action is needed.
“This damning evidence demands that the FSA stops dithering and
takes decisive action to sort out the PPI market,” said Which? CEO
Peter Vicary-Smith.
