YOUR INDUSTRY
Top 10 Hot Topics
- Consumer Credit Licensing
(CCL) - Advertising
- Europe
- OFT
- Principles-based regulation
- Treating Customers Fairly (TCF)
- Payment Protection Insurance (PPI)
- FSA Fees
- FOS/FSCS
- FAQs
Your Industry
Current Issues
PAYMENT PROTECTION INSURANCE (PPI)
The payment protection insurance (PPI) sector has come under heavy scrutiny from not just one regulator but two. Both the Financial Services Authority (FSA) and the Office of Fair Trading (OFT) have placed the UK PPI sector firmly under the microscope. FSA has concentrated on the standards of advice and selling of PPI, whilst the OFT has conducted a market study in its entirety looking at the competition issue.
FSA Thematic Work
FSA conducted three rounds of thematic work into the PPI sector, the first in November 2005. This round of research (which included mystery shopping) found firms failing in a number of areas. As a result the industry was effectively placed ‘on notice’ to get its affairs its house in order and raise standards.
For further details click on the following link: http://www.theafb.net/news/newsflash.php?id=80
OFT Market Investigation
In April 2006, the Office of Fair Trading (OFT) launched a market study in the UK's PPI market. The launch of the study followed a 'super complaint' from Citizens Advice (CitA) to the OFT in September 2005.
In August 2006 the OFT published its paper on the emerging issues which had arisen during the course of its PPI market study. The main focus of the market study was 'on how well the market delivers good value for consumers'.
Competition Commission (CC)
On 7 February 2007 the OFT referred to the Competition Commission (CC) the supply of all PPI to personal customers in the UK. As a result CC released a provisional decision on the package of remedies. CC considered the remedies separately for each type of PPI policy, and as a result concluded that all types of PPI should be treated equally.
For further details click on the following link: http://www.theafb.net/news/newsflash.php?id=133
http://www.theafb.net/news/newsflash.php?id=138
The Market Reaction
In January FSA confirmed that many of the larger lending institutions will stop selling single premium PPI along side unsecured personal loans. Alliance & Leicester, Barclays, The Co-Operative Bank, Lloyds Banking Group and RBS/NatWest were amongst the lenders confirming the removal of PPI from their suite of products, following the CC report.
For further details click on the following link: http://www.theafb.net/news/newsflash.php?id=145
Competition Commission (CC) Outcomes
At the end of January, CC published their long awaited, and much anticipated final report to address the competition issues associated with PPI.
The report concluded that businesses offering PPI alongside credit face little or no competition when selling PPI to their credit customers. To address this CC introduced a package of measures designed to initiate competition in the market which included a ban on Single Premium PPI (SP PPI) and a prohibition on the active sale of PPI by a creditor within 7 days of the sale of credit.
For details of AFB’s press release click on the following link: http://www.theafb.net/media-centre/press.php?id=85
FSA Ban on Single Premium
In February, following on from the outcome of the CC’s remedy report, FSA sent a Dear CEO letter to all firms selling single premium PPI (PPI) with Unsecured Personal Loans. The letter follows on from the voluntary decision taken by many lenders to stop selling SP PPI back in January. FSA imposed a deadline on firms; by the 29 May 2009 firms must stop selling single premium PPI.
For further details click on the following link: http://www.theafb.net/news/newsflash.php?id=158