The reports were published by the Financial Services Authority's (FSA) and Office of Fair Trading's (OFT).
Following its second review of work into the sales standards of PPI, the FSA is now exploring the case for further regulation of PPI sales. This will be considered as part of its ICOB effectiveness review. The OFT’s report outlines its intention to refer the UK’s PPI market to the Competition Commission. Of the five distinct PPI sectors the report covers (first-charge MPPI, second-charge PPI, unsecured loan PPI, credit card PPI, and store card PPI) OFT are only minded to exclude store card PPI from the referral.
Rob Griffiths, associate director of AMI, commented: “We are disappointed that mortgage payment protection insurance (MPPI) has been included in the OFT’s proposed referral to the Competition Commission. The FSA chose not to include firms that sold regular premium PPI in the prime mortgage sector in its Phase 2 work and OFT itself notes the differences and discusses MPPI separately ‘because it appears to operate slightly differently to the other markets’.
“AMI formally responded to the OFT’s Emerging Issues paper published in the summer setting out MPPI as a distinct product with a different sales process to other PPI sectors. That response also stressed the important role of the intermediary in the MPPI sector, working on behalf of their client to find the most suitable product from the market.
“We are fully aware this is an area in which standards need to be raised and have been working with FSA to do this. AMI has highlighted the areas of concern in this sector and issued a PPI Checklist to members to help clarify the issues they need to address when advising customers. Our ongoing commitment to address these issues has been formulated in our PPI Action Plan.
“We will continue to work with the FSA to improve standards and firmly believe MPPI is a product which can meet many consumers’ needs. AMI will also review the contents of the OFT’s report and will formally respond on behalf of our members.”
