Irregardless of a major crackdown by the Financial Services Authority in the last few years on Payment Protection Insurance (PPI), the Financial Ombudsman Service is still having to investigate 4,000 cases of mis-sold payment protection this year.
This figure is twice that of the cases investigated last year, despite extra efforts by the FSA to prevent the mis-selling of PPI and heightened public awareness of how it can be sold unfairly, unclearly or even unknowingly to customers.
Independent investigators are being inundated with cases wherein people have felt duped by these polices which are often sold to them without their knowledge as part of an agreement such as an insurance policy or mortgage.
In November 2005, the FSA carried out a programme which revealed that poor selling practices were rife amongst companies and an obvious lack of compliance controls in place.
Clive Briault, FSA Managing Director for Retail Markets, said at the time: “When properly structured, explained and sold, payment protection insurance can provide worthwhile cover for consumers against unexpected changes in their personal circumstances.
“However, compliance standards in other areas of the market are generally weak. Those firms where these problems exist must take urgent action to address them. This poses a serious risk to consumers because of the poor disclosure of product and price details; the possibility that consumers may not be eligible to claim against their policies; and the fact that consumers may not be aware that they may receive little money back if they cancel these policies early.”
Martin Lewis, creator of MoneySavingExpert.com, said that “of the 20 million policies in the UK, I wouldn’t be surprised if half had been missold.” He is advocating that “It’s time for the millions who’re unaware of how poor their cover really is to see if they were missold and demand their money back.”
In spite of ongoing checks, the FSA issued a statement last month in which Mr Briault followed up on his previous comments: “We have, on a number of occasions, set out clearly our requirements for the selling of PPI. While some progress has been made by the industry, we are extremely disappointed that some firms have still made little progress in improving their sales practices.”
Mr Bruilt continued to say that they will now “strengthen our action against firms who fail to treat customers fairly when selling PPI.”, because “At the moment, too many firms are not meeting these requirements.”
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