Simon Burgess criticises payment protection insurance nil refund clause
- 18TH JUNE 2007
The Financial Services Authority has revolutionised payment protection insurance (PPI) since the beginning of its investigation into its value and the selling practices associated with it eighteen months ago.
Progress has been slow but changes have started to become apparent since the turn of 2007. There is no better evidence of that than the outlawing of the nil refund clause present in most policies.
The nil refund clause has been present in every payment protection insurance policy offered by high street lenders and banks since the protection first emerged as a viable insurance some years ago. The new rule stating that it can no longer be included in policy documentation will indeed ensure that it represents better value for money in the future.
Or so the thinking behind it says. Simon Burgess, Managing Director of the ethical British Insurance, has been very outspoken in his criticism for the nil refund clause for some time now and has been equally outspoken in his criticism of the Financial Services Authority over this recent ruling.
Burgess categorically states that: “This is a lightweight announcement - the FSA is saying consumers who have a ‘nil refund’ clause in their contract can get a premium refund if they cancel their policy and have not made a claim or they want to repay the loan early. But key issues have been ignored. No parameters have been set on the level of refund consumers should expect, providers could keep 99% of the premiums and they would not be falling foul of the FSA.”
He has a point. After all, why should any consumer pay for cover on a loan that has already been cancelled?
