The three main trade associations, the Association of British Insurers (ABI), APACS and the British Bankers’ Association (BBA), pointed out that, if sold properly, PPI provides important protection against loss of income due to redundancy or illness, taking the stress out of trying to meet repayments and of ongoing financial pressure. Millions of customers benefit from this insurance, with over 15 million policies in force. Last year nearly 500,000 claims were paid, enabling customers to protect their homes, possessions, and preserve their credit status.
The trade associations do however take seriously the FSA’s concerns and have made clear that they will work to address their specific concerns. At the same time, the associations were keen to establish that the FSA’s report should not be seen as indicative of the whole industry.
The trade associations also pointed out that of the 30 firms surveyed, covering the sale of PPI on credit cards, store cards, catalogues, unsecured loans, sub-prime mortgages and secured loans, none of them had yet received formal feedback on their individual performance. This feedback will help spread and recognise good practice, and identify any problems.
Stephen Haddrill, ABI director-general, said: "Payment protection insurance is a valuable product. Insurers and lenders are committed to driving up selling standards. We will look closely at the particular concerns highlighted by the FSA, and will discuss these with them, as well as discussing our own improvements.
"In particular, we want to ’raise the bar’ to ensure there is a good basic policy standard that all customers can rely on. We are also working on developing better communication between insurers, lenders and customers to ensure repayment is not sought whilst claims are being processed."
Ian Mullen, chief executive at the BBA said: "Treating customers fairly is something upon which banks place great importance. Staff are fully trained in competence, they are monitored and there are compliance systems in place. Naturally, where these checks are not working, they need to be addressed accordingly. We shall be pleased to continue talks with the FSA on how it feels that current selling practices could be improved, although we cannot of course compromise competition between the different providers."
Paul Smee, chief executive of APACS said: "We would draw attention to the fact that the Banking Code requires PPI providers to act fairly and reasonably in all their dealings with consumers. We always advise consumers to carefully consider their options before taking out any product."
