For a while now many consumers have been complaining about mis-sold or compulsory payment protection policies contained within their loan agreements. We at Stephensons are certainly receiving a lot of enquires about this area. It is therefore not surprising that the FSA have decided to reform the system to offer further protection to the public.
The new package is supposed to ensure more fairness when either purchasing the PPI package or when complaining about the product at a later date, when for example it doesn’t cover the Consumer. The FSA is to introduce new handbook guidance to ensure complaints are handled properly and redressed fairly. In addition they intend to explain to firms when and why they should analyse their past complaints and identify their flaws and they are to prepare an open letter setting out common failings at the point of sale and bad practices.
These new measures are to be implemented by 1st December 2010 and the FSA will be monitoring firms closely to ensure the new standards are adhered to.
These measures have been introduced in the wake of other reforms such as the ban on selling single premium PPI on unsecured loans and the investigation of a number of firms and individuals which has led to £13 million being paid in fines.
What is clear is that these measures should help to reduce the amount of complaints about PPI but I can’t help thinking that banning it at the point of sale was the best move the FSA could have made as it is likely to have dramatically reduced the possibility of mis-selling the PPI. Any measure which gives the consumer time to think about their own financial needs without the promise of a lump sum if they take the policy is bound to lead to less impulsive decision making and sensible borrowing.
Despite the reforms many consumers will already be in receipt of loans provided with PPI, sold at the point of sale, in a manner which suggested it must be included if they wanted the loan or on the pretence that it would cover them should they lose their job or become unwell. I would encourage these consumers to look at their agreements and seek redress either from the Financial Ombudsman Service or solicitors which specialise in this type of claim, such as Stephensons.