Financial Conduct Authority
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FSA wants all firms to stop selling single premium PPI
The Financial Services Authority (FSA) has written to all firms still selling single premium Payment Protection Insurance with unsecured personal loans (SP PPI UPL) asking them to withdraw the product as soon as possible, and by no later than 29 May.
The letter, which has been sent to chief executives, follows the decision last month by a number of major banks to step selling SP PPI UPL. Some of these firms, along with other market players, now offer or plan to offer regular premium PPI instead of a single premium product.
The letter from Jon Pain, the FSA’s managing director of retail markets, reminds firms that the Competition Commission’s final report on its PPI market inquiry, published on 29 January, included a remedy that prohibits the sale of single premium PPI policies after 1 October 2010.
“We recognise the severity of the current economic climate and the financial problems many consumers are facing. Moreover, we believe that PPI can play an important and legitimate role to cover repayments on specific credit agreements for consumers facing job loss, or other issues at this difficult time. However, our focus remains on how this product has been, and continues to be, sold and whether consumers have been treated fairly during the sales process.
“We therefore request that if your firm has not already done so, it stops selling single premium PPI with unsecured personal loans as soon as possible and in any event by 29 May 2009. In view of our ongoing concerns across the single premium market over the standard of sales, we believe this request is justified to bring an orderly withdrawal of single premium PPI from the market.”
The letter asks for a written response to the request to withdraw SP PPI UPL to be sent to the FSA by 31 March 2009.
Notes for editors
- Dear CEO Letter PDF
- FSA’s update on PPI on 20 January 2009 and its statement of 30 September 2008.
- To help consumers make informed decisions, the FSA's consumer pages - Moneymadeclear - include questions that people should ask themselves before taking out PPI along with PPI comparative tables to help them shop around.
- Tackling poor Payment Protection Insurance (PPI) sales practices is a priority for the FSA. The aim of the FSA's work into the sale of PPI is to secure better outcomes for consumers through firms improving their sales standards and consumers making well-informed purchasing decisions. The FSA expects firms to meet the Principle of treating customers fairly and to comply with Insurance Conduct of Business (ICOBS) rules.
- The FSA has taken action against 20 firms over poor PPI sales practices. This includes FSA’s largest fine in the retail sector on Alliance & Leicester who were fined £7m in October 2008 for serious failings in its telephone PPI sales.
- The Competition Commission’s (CC) Final Report on its PPI market inquiry was published on 29 January 2009.
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
- The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.