FSA capitulating to payment protection insurance providers
MORTGAGE STRATEGY - 9TH APRIL 2007
I've had my fair share of abuse from people fed up with me banging the drum about consumer protection and the raw deal that too many people get when buying payment protection insurance.
My critics seem to think I derive some sort of pleasure from always being the one to knock the industry and lay bare its problems for all to see. It's almost as if by speaking out about the problems, people think I'm airing the industry's dirty laundry in public and would be better whispering my comments behind closed doors.
The truth of the matter is that it's boring to have to stand up and criticise industry practitioners and legislators on a continuing basis, but at every opportunity these people fail to seize the initiative and deal with the problems effectively.
The recent announcement by the Financial Services Authority was a classic example. In coming to an agreement with the payment protection insurance industry over the refunds offered in relation to single premium policies, the regulator has capitulated to providers' demands.
Despite the FSA claiming the agreement was "designed to make refunds clear and fair for all consumers", the truth of the matter is that it has fudged the issue.
Why, when consumer protection is its raison d'etre, did the FSA not insist on pro rata refunds for such policies? Why did it allow leeway for firms on this and simply ask that the refunds were calculated fairly?
Principled regulation is all very well and has been introduced to excellent effect in many areas, but there is a time and a place for setting clear boundaries and this is one of them.
Yes, it's good that the industry is moving away from nil refund clauses in contracts but why not go the whole hog and define what does and does not constitute a fair refund? Why leave consumers in doubt?
Things may be moving in the right direction but the speed at which they are going is frustrating and leaves the door wide open for consumers to be mistreated in the interim.
More decisive action on single premium policies would slam the door shut once and for all and allow everyone to move on. More importantly, it would stop me writing to complain about another missed opportunity for an industry that should be doing so much better for itself and its clients.
Simon Burgess Managing director Britishinsurance.com
