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Personal Protection Insurance To Be Investigated

The Financial Services Authority (FSA) has outlined plans to improve the way debt insurance is sold.

Personal Protection Insurance (PPI) is supposed to repay mortgages and other loans if the borrower becomes ill or unemployed. However, some customers are unaware of the restrictions on policies, the cost involved and that PPI is usually optional. The sale of PPI has been very profitable for finance companies in the past, but has caused complaints from consumer groups. Last year an investigation by the Office of Fair Trading concluded that many policies did not provide a good deal for the customer and offered less protection than many realised. The FSA has carried out earlier checks and now intends to extend this process.

Over the next 6 months the FSA is to continue work to ensure that consumers are being treated fairly. The study will include branch visits, mystery shopping and will also follow up on poor standards previously discovered. By the end of this latest work it is hoped that around 200 firms will have been visited. The aim is to find out what progress has been made so far and decide on further action required. The FSA has already taken steps to force 10 companies to improve services and may impose new regulations, if this is considered necessary to protect customers further.