The city watchdog is stepping up its crackdown on the possible mis-selling of payment protection insurance (PPI).
The (FSA) has announced it will make undercover visits to firms that have already been identified as deficient as part of an ongoing probe into the controversial PPI market.
It will also call on companies not previously visited in a bid to improve standards across the board.
PPI is sold by many banks and credit card companies when you take out a new loan or card. It’s designed to cover your repayments if you become unable to work due to certain illnesses or injuries, or if you lose your job.
There are an estimated 20-25 million PPI policies in force in the UK and the £5.5 billion PPI market is facing a full investigation after an initial Office of Fair Trading (OFT) probe found it was failing consumers.
The FSA’s undercover work will examine whether customers are receiving clear information about PPI and being told that the product is optional.
It has said that firms that fail to meet appropriate standards will face disciplinary action.
The FSA’s Managing Director of Retail Markets, Clive Briault, said: ‘Customers should come away from the sale having been given the best possible chance of understanding that PPI is almost always optional, what the policy will and will not cover, and how much it costs.
‘The next phase of our programme will tell us what progress has been made and what further action is necessary.’
Which? has been a long-time critic of the PPI market. We believe it performs poorly, offers complex, often inappropriate and poor value policies and is not delivering adequate protection for consumers.
Which? Personal Finance Campaigner Pula Houghton said: ‘Industry measures to give consumers more information will be too little too late for many consumers and are no substitute for treating them fairly in the first instance.
‘Which? is pleased to see that the FSA is finally stepping up its efforts and that it has been publishing enforcement cases but we would reiterate the need for it to become a much tougher enforcer.
‘The FSA now needs to work with the Office of Fair Trading, which has also recognised significant failings in the market, to make long term improvements.’