FSA’s New PPI Rules Could See Refunds Of Almost £3 Billion
Nearly three million people with Payment Protection Insurance (PPI) policies could be in line for compensation totalling almost £2.7 billion.
There is expected to be a flood of complaints after the Financial Services Authority (FSA) issued new rules, yesterday (10/08/10), on the way firms should handle complaints about mis-sold PPI policies.
Prior to the new rules set out by the FSA, many firms were automatically rejecting mis-sold PPI complaints, leaving customers to have to turn to the Financial Ombudsman Service (FOS) to resolve their complaints. The FOS has revealed it has received more than 100,000 complaints about PPI already, with nearly 2,000 of these, received in the last week alone. Four out of five cases taken to the FOS were decided in favour of the customer, with the firm selling PPI, having to pay compensation typical of around £1,500.
The FSA has said “Data (received from 18 major sellers of PPI) shows that on average, firms reject almost half of the PPI complaints they receive, but some reject nearly all. Around 30% of rejected complaints go on to the ombudsman, where more than 80% are overturned in the consumer’s favour.”
It is estimated that the number of complaints about PPI will rise to around 550,000 a year for each of the next five years as a result of the FSA’s new rules.
Citizens Advice debt policy officer Peter Tutton said: “We welcome the fact that the FSA is taking firm and appropriate action to get to grips with the harm done to consumers by widespread mis-selling of PPI over many years. Evidence from our CAB network has consistently shown that too often consumers have been mis-sold PPI policies that are far too expensive and completely unsuitable for their needs, often contributing to debt problems. A huge step to restoring consumer confidence is ensuring that people who complain get a fair hearing and proper redress. Up until now, firms have too often handled complaints very badly, so FSA action to spell out to firms what is expected of them was absolutely necessary.”
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New PPI Clampdown Measures Announced By FSA Will Cost £3.2bn
The Financial Services Authority (FSA) estimates the cost of its clampdown on Payment Protection Insurance (PPI) could rise to £3.2 billion.
The FSA had previously estimated it would cost £3 billion to reform the PPI market. These cost estimates have been revised as the FSA expects the number of complaints to firms selling PPI will receive to rise due to new sales measures being implemented.
It is estimated firms are likely to receive an average of 550,000 complaints this year rather than the 500,000 complaints estimated by the FSA in its consultation paper on the PPI sector in March.
The new measures introduced to the PPI market will ensure customers receive better information when purchasing PPI and that they are treated more fairly, should they have to complain about the product. Firms selling PPI have until 1st December 2010 to comply with the FSA’s new measures for the sale and complaints handling relating to PPI.
The FSA has said firms could bear costs of between £1.1 billion and £3.2 billion as a result of the measures, with complaints handling procedures to be introduced as part of the rules, making up £800 million to £1.3 billion of the costs.
FSA director of conduct risk Dan Waters said: “With this package of measures we’re confident we can mend a market that has been broken for too long. This remedy is fair to consumers and the industry alike. The onus is now on the industry to ensure it treats all customers fairly. We will be monitoring the implementation of our guidance closely to ensure real change is delivered.”
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FSA Announce New Measures Designed To Reform PPI Market
The Financial Services Authority (FSA) has announced a package of measures designed to reform the Payment Protection Insurance (PPI) market.
The FSA has said the new measures will ensure customers receive better information when purchasing PPI and that they are treated more fairly, should they have to complain about the product.
The package of measures includes a new handbook, that will ensure complaints are handled properly and readdressed fairly where appropriate. It will also explain when and why firms should analyse their past complaints, to identify if there are serious flaws in sales practices that may have affected complainants and even non-complainants.
An open letter will also be put together by the FSA setting out common sales failings to help firms identify bad practice.
Firms must implement the FSA’s new measures by December 1st. They must use the time between now and December to ensure staff selling PPI are trained to a higher level. The FSA has said it will be monitoring firms closely to ensure the new standards are adhered to.
Dan Waters, director of conduct risk at the FSA, has said that with the new measures, consumers will be treated fairly whether they are buying or complaining about PPI.
He said: “Since we took over the regulation of PPI we’ve carried out 24 investigations and three thematic reviews, issued warnings, halted the selling of single premium PPI with unsecured personal loans, visited over 200 firms, and handed out some very significant fines of approximately £13m. Now, with this package of measures we’re confident we can mend a market that has been broken for too long. The onus is now on the industry to ensure it treats all customers fairly. We will be monitoring the implementation of our guidance closely to ensure real change is delivered.”
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Tesco Bank Expose PPI Customers To Fraud
Tesco Bank has lost the personal details of dozens of customers complaining about PPI.
39 customers who were in angry dispute with Tesco Bank over mis-sold Payment Protection Insurance (PPI), have had papers containing names, addresses and account details lost, leaving them exposed to a risk of fraud.
The customers’ details have been lost after the data was sent unprotected using the standard postal service.
It is understood the details of the 39 customers have been lost in the post between offices from Manchester to Glasgow.
Tesco have blamed a service provider for the data loss. A Tesco Bank spokesman said: ‘Tesco Bank and the service provider have robust rules and procedures for handling customer information.
‘There is no record of the correspondence being sent by courier or recorded delivery. That leaves the possibility that it was sent by standard mail, contrary to ours and our suppliers data handling procedures.
Prior to the data loss, the customers had been in the process of complaining to Tesco Bank about PPI on which they could not make a claim.
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PPI No Longer To Be Sold By Lloyds
Lloyds ends sale of PPI.
The Lloyds Banking Group has announced it will no longer sell Payment Protection Insurance (PPI) on all of its loans, credit cards and mortgage deals.
A spokeswoman for Lloyds said ending the sale of PPI is due to increased regulation on this type of insurance.
PPI has been the subject of long running criticism due to the way it has been sold. The sale of PPI policies are now being restricted by the Financial Services Authority (FSA) and the Competition Commission.
Lloyds is the first bank in the UK to make the decision to stop selling PPI policies. The Lloyds group has said this decision will extend to all of its brands including Halifax, Bank of Scotland and Cheltenham & Gloucester.
Instead of selling PPI cover, if customers are interested in taking out an insurance policy, Lloyds will offer them a British Bankers Association (BBA) advisory leaflet.
Martin Lewis from consumer website moneysavingexpert.com was among those happy about the decision, he had to say:
“This insurance, which has been scandalously mis-sold for years leaving many consumers in misery, is estimated to be worth up to £5bn a year for the industry
It can provide useful protection to people if they are sick or lose their jobs as it covers their repayments, but people should go to competitive standalone insurers rather than banks.
That’s because they sell it at four or five times over the odds, often without checking suitability, meaning many have been duped into paying a hidden £1,000 extra on policies that are worthless for them.”
Which? chief executive, Peter Vicary-Smith echoed his views. “Lloyds decision to stop selling PPI is a huge victory for consumers. Hopefully other banks will follow suit and we’ll finally see the back of this poor protection product” he said.
Experts predict Lloyds decision to stop selling PPI will cause many more High Street banks to follow suit.
Lloyds has said existing customers who have taken out policies or those in the process of doing so, will not be affected.
Have you been mis-sold PPI? We can think smarter and claim back your mis-sold PPI payments. Apply online to find out more, you could be owed thousands of pounds.
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Banks Still Need To Improve Handling Of PPI Complaints
Banks have been warned they still need to improve the way they handle Payment Protection Insurance (PPI) complaints.
The Financial Services Authority (FSA) has complained too many people are being forced to take their mis-sold PPI cases to the independent Financial Ombudsman Service (FOS).
The FOS, which acts as a mediator between customers and their banks, still receives up to 1,000 complaints a week about PPI and upholds 90% of these cases in favour of the customer.
Emma Parker from the FOS said “Banks still need to improve the way they handle PPI complaints. We will continue to work with the regulator where we see banks treating customers unfairly.”
The Competition Commission announced earlier this year customers would have a 7 day cooling-off period, allowing them to shop around for PPI and not feel pressured by banks and building societies to take out a policy at the point of obtaining finance.
Vera Cottrell of Which? said “Banks have been warned countless times by the FSA and the Ombudsman about PPI complaints and it is incredibly disappointing that they are refusing to implement the FSA’s guidelines. Banks are wasting everyone’s time by automatically rejecting so many complaints — the vast majority of cases should not have to go to the Ombudsman.
The FSA is currently in the process of putting together tougher new rules regarding the way PPI is sold and how mis-sold PPI complaints should be dealt with by banks.
A spokesman for the FSA said “We remain firmly of the view that the PPI market is broken and needs to be fixed. We are committed to bringing about genuine, lasting change, and the package of measures we hope to finalise this summer will go a long way to address this.”
Have you been mis-sold PPI? We can think smarter and claim back your mis-sold PPI payments. Apply online to find out more, you could be owed thousands of pounds.
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PPI Sale Restriction Plans Set To Save Consumers Money
PPI Sale Restriction Plans Set To Save Consumers Money
New legislation put in place by the Competition Commission will restrict the sale of Payment Protection Insurance (PPI) at the point of obtaining finance. The ruling will be bad news to High Street banks, who are set to lose an important source of income, but a welcome move to consumers.
The ruling will see regulators from the Competition Commission restricting banks from selling PPI to customers at the time they borrow and for a fixed period, possibly 14 days, after.
The Competition Commission has reported currently 75% of all mortgage PPI policies are sold at the time of obtaining finance and that many borrowers are unaware Payment Protection Insurance is available from outlets other than the lender.
The new legislation will mean more consumers saving money, as they realise they have the opportunity to shop around when it comes to purchasing PPI.
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Fears that Payment Protection Insurance will no longer be considered
A report by consumer money comparison website Moneynet has expressed fears that Payment Protection Insurance (PPI) will no longer be considered by customers obtaining finance.
Mis-sold policies
PPI has a tarnished reputation due to a large number of policies previously being mis-sold. Many customers are now apprehensive about purchasing this insurance. There is a danger that if lenders become prohibited from selling PPI cover at the point of sale, many customers won’t even consider this insurance.
PPI is still ideal for some
Despite its tarnished reputation, PPI is still a valuable safety net for those who need it, covering borrower’s monthly payments if they are unable to work due to being made redundant, falling ill or having an accident; Payment Protection Insurance is still an ideal product to consider.
People should still protect financial commitments
With warnings given by David Cameron for painful and unavoidable cuts to reduce the UK budget deficit, there will be fears that jobs may go. PPI is not an ideal product for everyone, but with fears of redundancies, it can be a good way for people without other insurance cover to protect their financial commitments.
PPI, it’s still a protection racket
PPI, it’s still a protection racket?
When you take out your mortgage, loan or credit card you are persuaded to take out payment protection insurance as ‘peace of mind’. Let’s say it costs around £30 per month, which you pay year in, year out up until the day you really need to make a claim. You are one of the thousands who has been made redundant, suffered a sickness or and accident meaning you are unable to work. The premiums are then raised by the provider or the cover is withdrawn.
Lord Turner, the FSA chairman described much of what the city does as “socially useless”, this phrase should be applied by lenders at the point of sale for a PPI Policy.
Banks are estimated to make up to 80% profit on PPI premiums; Barclays for example made, in 2001, 10% of its global profits from the sale of PPI. A figure that analysts have also attributed to the accounts of Alliance and Leicester, TSB and Lloyds when PPI sales were at their height.
A record £10m fine(reduced to £7m for early payment) was handed to Alliance & Leicester in 2006 after the FSA began investigating the industry for the mis-selling of PPI policies sold against personal loans. Several other lenders were also handed penalties as the FSA levied fines.
Even after the levies the PPI steam train stills rattles along, Which? Discovered that only 28% of premiums collected on mortgage PPI (also called accident, sickness and unemployment insurance or ASU are ever paid out in claims. This statistic alone means you should think about your PPI charges stacking up month on month.
Were you missold? Could you be owed £2000+? It’s time to think smarter & Claim Today!
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