All to stop selling single premium Payment Protection Insurance, PPI

The FSA has now written to all firms selling single premium Payment Protection Insurance (PPI) with unsecured loans requesting they refrain from doing this by 29 May at the latest.

In his letter, the FSA’s managing director of retail markets, Jon Pain, has reminded the firms of the final report from the Competition Commission’s PPI market inquiry, published at the end of January, which included reference to the prohibition of selling single premium PPI after 1 October 2010.

He wrote ‘We believe that PPI can play an important and legitimate role to cover repayments on specific credit agreements for consumers facing job loss, or other issues at this difficult time. However, our focus remains on how this product has been, and continues to be, sold and whether consumers have been treated fairly during the sales process.’

He went on to request ‘that if your firm has not already done so, it stops selling single premium PPI with unsecured loans as soon as possible and in any event by 29 May 2009.

The FSA regulates the financial services industry and it considers addressing the poor PPI sales practices as a priority. It wants to ensure that consumers make well informed PPI purchase decisions.

Firms selling PPI are expected to meet the FSA Principle of treating customers fairly and to comply with rules as laid down in the Insurance Conduct of Business (ICOBS).

The FSA has already taken action against a number of firms over poor PPI sales, including Alliance & Leicester which was fined £7m last year.