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Which? calls for sweeping PPI reforms

Consumer watchdog writes to FSA demanding overhaul

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FSA’s rules advise how firms and advisers should sell PPI

Which? has written to the Financial Services Authority (FSA) calling for an overhaul of the PPI market.

The move comes as Which? Money publishes details of a couple who paid £22,568 in Payment Protection Insurance (PPI) for a loan of £56,000.

Which? is demanding compensation for customers who have been mis-sold PPI and also for a robust endowment style FSA and company communication strategy. Under this strategy companies would have to write to all PPI customers enclosing personalised information on how much they have paid as well as detailed information about the issues of concern surrounding PPI.

PPI failings

Sold alongside loans or finance agreements, PPI is a ‘single premium policy.’ This means a lump sum covering the cost of the insurance is added to the amount you have borrowed, so consumers pay interest on both the insurance premium and the loan. Consumers can get practical advice on PPI policies in our How to tell if you’ve been mis-sold PPI guide.

Which? personal finance campaigns manager, Doug Taylor, says: ‘Slapping firms on the wrist with large fines is a start but doesn’t go far enough.

‘The fact that firms are still being fined for PPI failings shows that the problem won’t go away on its own and PPI’s relatively low profile means the number of complaints doesn’t necessarily reflect the number of mis-sold policies.

‘The FSA must do more to deter firms from mis-selling in the first place, ensuring that all victims of mis-selling are automatically compensated with a fair and robust system.’


Full demands from Which? to the FSA include:

  • All PPI sales from firms found guilty of mis-selling should be pro-actively reviewed and where mis-selling has occurred, customers are adequately compensated.
  • A robust endowment style FSA and company communication strategy whereby companies write to all customers with a PPI policy enclosing personalised information on how much they have paid, and FSA factsheets explaining major issues of concern with the PPI market, how to identify poor sales practices and what to do next if you think you were mis-sold.
  • An additional focussed review of single premium loan PPI. This would target consumers who suffer the greatest detriment from PPI mis-selling and would also identify those who have not yet made a complaint and who are unlikely to be prompted to do so simply by press activity.
  • FSA must develop a ‘redress payments calculator’ for PPI which would ensure consumers are adequately refunded and that the redress offered is fair and reasonable.

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