market talk
“PPI is broken” Exeter Friendly suggest an alternative
n 9 March the Financial Services Authority published feedback to its plans to reform the payment protection insurance market, and not surprisingly while consumer groups were very supportive of the proposals, PPI providers and industry groups were highly critical.
The FSA therefore announced
a further six-week consultation on its revised package of measures. For example, the wider costs and consumer benefits have altered since the original consultation and the FSA wants to test the revised financial assumptions with firms.
Dan Waters, the FSA’s
director of conduct risk, says,
PPI“needs to be fixed”
O
“We’re disappointed that the industry has responded so critically to our proposals, but we remain 100% committed to bringing about genuine, lasting change in the PPI market. “We do, however, recognise the importance in ensuring that genuine concerns have been listened to. Our commitment, nevertheless, is evidenced by the fact that we have halted single premium PPI sales; taken enforcement action against 23 firms; issued two ‘Dear CEO’ letters; undertaken three thematic reviews; conducted numerous mystery shops; and visited over 200 PPI providers. We remain firmly of the view that the PPI
market is broken and needs to be fixed.”
Meanwhile consumer groups are not so impressed with the delay. “The FSA must not give in to pressure from industry on PPI,” was the response from Adam Phillips, chairman of the Financial Services Consumer Panel. “For too long, firms have been letting down their PPI customers by not handling their complaints fairly. It seems that too many firms have regarded PPI as an easy product to sell and make money, without considering whether it really is right for the customer. Now the industry seems determined to fight against the FSA introducing new rules and
Alternative PPI?
“
champion Which? in the aftermath of the customer outcry that overtook the income protection sector following the MPPI mis-selling scandal. That’s the trouble when the occasional bad apple or two get into the insurance barrel - everyone gets tainted, innocent and guilty alike. The Which? spotlight on this occasion favours ‘Bills & Things’, an income protection product that involves no financial underwriting at the point of claim. This is found on the Exeter Family Friendly and the Pioneer brand website of the Exeter Friendly Society. Talking about the current downturn in PPI sales, sales and marketing director Richard Wyatt-Haines says that despite
A
6 insurancepeople APRIL 2010
real alternative to PPI”. Thus spake consumer
the desperate need for consumers to pay their bills if they fall ill, he believes the protection market and its products are still failing to win over customers because they don’t offer what customers want. “Whilst the sector continues to offer consumers complex products, with complex terms, written in complex language, they cannot blame them for not buying protection products and spending their money elsewhere.
“In the same way that a customer is sold a washing machine with 20 wash programs, and everyone knows that they are only ever likely to use two of them, protection insurers and providers are just as guilty of providing multiple options, and bells and whistles that
consumers don’t use, don’t care about and hence, don’t buy. “The protection market has to move to a world where simple products can be easily explained and understood at point of sale, so customers can see how they can protect themselves and their families from the impact and cost of ill- health.
“The industry must gain a much deeper understanding of the emotional needs and concerns of individuals and families and predicaments they face. Unfortunately such thinking, to date, appears to be beyond the mindset and capability of most of the sector.” ‘Bills & Things’ has
obviously inspired consumer champions Which? “This is a real alternative to PPI. The plan offers far more comprehensive
Richard Wyatt-Haines
cover than PPI, often at a much lower cost. In addition, it’s an underwritten plan as opposed to exclusion-based, so it takes into account your own medical circumstances. This means there should be no nasty surprises if you need to claim.”
See www.exeterfamily.co.uk
in association with
guidance which would ensure consumers receive a fairer outcome if they make a complaint. “However, this is no reason for the FSA to back off, and we are pleased that the tone of the announcement indicates the FSA is not planning to do so. Consumers need tough action from the FSA. This consultation reveals yet another delay in getting fair treatment for PPI consumers. The FSA will now wait for clarification of its powers under the current Financial Services Bill - which is not guaranteed to be passed in this Parliament - before deciding how to get fair treatment for consumers who have had past PPI complaints rejected.”
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