As the FSA’s investigation into the PPI market continues apace, Paul Anning reports on another positive move taken by firms as they fall into step with the regulator’s push to stamp out unfair sales techniques.
Who: Financial Services Authority
When: July 2007
Law stated as at: 31 July 2007
Major finance firms, who offer loans on their websites, have agreed to change the way they sell PPI over the internet. Rather than using techniques such as the 'pre-ticked' box, which automatically includes PPI in a quotation, now customers will have to actively choose to buy it. The FSA commented that, while customers were, naturally focused on getting the loan itself, it is "just as important that they also think about whether or not they want to protect their loan repayments by taking out PPI cover".
Why this matters:
There are three reasons why this matters:
- PPI reform is top priority – this is the latest in a series of initiatives by the FSA to improve sales standards in the PPI market. It follows an agreement earlier this year between the regulator and a number of trade associations which saw the end of 'nil refund' terms in single premium PPI policies;
- increased enforcement – the FSA has already taken enforcement action against nine firms for breaches in relation to poor PPI selling practices. As the regulator continues its investigations, firms should expect the possibility of enforcement to increase; and
- changes in regulation of PPI sales – the FSA is due to report on its latest investigations into PPI sales standards this September, which may result in additions to its proposed changes to the Insurance Conduct of Business rules, which are due to come into effect in January 2008.