Watchdog to Probe Payment Protection Insurance
Payment protection insurance industry to be investigated after complaints of mis-selling
24th July 2005
The Financial Services Authority (FSA) is to undertake an undercover investigation of the payment protection insurance (PPI) industry to ensure that new regulations are being followed.
The news comes following complaints that some consumers are being sold inappropriate policies to cover their repayments on loans and other credit should they lose their jobs, when under the terms of the policies they are unlikely to ever be able to make a successful claim.
An undercover investigation by a trading standards officer revealed that most of the high street banks visited automatically added PPI onto a loan quote without making any real effort to find out if the policy was of any use to the borrower. Some advisors also appeared to have limited knowledge of the PPI products they were selling.
The PPI industry is worth around £5bn a year in the UK, and has been highlighted as an 'emerging risk' to consumers since the general insurance industry came under FSA regulation at the start of the year.
Read More: BBC 'Inside Money'
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More on Payment Protection Insurance : Loans.co.uk Fined £455k (News, 26/10/2006), PPI Investigation to Go Ahead (News, 08/12/2005), OFT Complaint Against Payment Protection 'Racket' (News, 13/09/2005) |
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