FSA to Get Tough Against Bankster Payment Protection Insurance PPI Scam

By: Nadeem_Walayat

The Financial Services Authority (FSA) has finally decided to get tough with the bankster's for scamming customers by means of Payment Protection Insurance charges that many customers are forced to take on when borrowing despite the fact that exclusion clauses in the agreement usually mean that the premiums paid were worthless when it comes to attempting to make claims, that and they way the products were mis-sold by adding the charges as though they were a requirement rather than an option thus confusing customers into literally paying double the interest rate on the loans if the PPI was included in the AER interest rate figures stated.

PPI abuse is not just limited to the bankster's, mobile phone operators are also quick to sign customers up to wasteful PPI cover, which usually means the customer is double covered under existing home contents insurance.

The FSA specifically states the following measures -

Firms representing more than 40% of face-to-face sales in the Single Premium Unsecured Personal Loan PPI market have agreed to review these sales and redress those consumers identified as mis-sold.  Ongoing supervisory action continues with the remainder of this market place.

These measures build on the agreement the FSA obtained from the industry earlier in 2009 to stop selling Single Premium PPI on unsecured loans.

For complaints about all PPI products, new measures will tackle the key issue that too many complaints are rejected by firms and then overturned by the Financial Ombudsman Service (FOS) in favour of the consumer:

• new guidance (due to take effect by the end of the year) will ensure PPI complaints are handled properly, and redressed fairly where appropriate - the FOS has indicated support for the FSA’s proposed approach; and
• a new rule will require firms to reopen some 185,000 previously rejected PPI complaints and reassess them against the guidance.

In addition, the FSA is launching targeted assessment of sales practices for PPI on secured loans and credit cards; if the potential for mis-selling is identified, pro-active reviews by firms may be extended to these areas too.

Jon Pain, FSA managing director of retail markets, said:

"Consumers should not be pressured or deceived into buying PPI and they are entitled to have a policy properly explained to them.  It is unacceptable that despite previous warnings about poor sales practices, backed by 22 enforcement cases and significant fines, the PPI sector still needs the FSA to intervene on this. 

"And the outcome of a complaint about a PPI sale should not depend on whether or not the complainant persists past the firm on to the FOS.

"The industry must show it can act fairly, consistently and in the best interest of consumers on PPI. All firms operating in this sector should take note and where necessary get their house in order. Where we find problems in PPI sales or complaint handling, firms can expect tough action, including requiring them to undertake reviews and, where appropriate, pay redress."

The problem of missing selling of PPI is not something new as the abuse of customers has continued for more than the past 10 years, therefore FSA action now whilst welcome is still a case of too little too late by an regulator that is several years of not decades behind the curve.

By Nadeem Walayat
http://www.marketoracle.co.uk

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Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 300 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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