Keep an eye on payment protection insurance
NICHE MORTGAGES - 1ST FEBRUARY 2007
Dear Kevin,
Many people look at January through fresh eyes with the view to making a clean break from the past and making improvements for the future. Personally I hope the Financial Services Authority (FSA) keeps right on track with the progress it was making as last year drew to a close.
The Canary Wharf watchdog is at last beginning to show the payment protection insurance industry that its bite is every bit as bad as its bark. The latest firm to be fined is Redcats (Brands) Ltd, which was hit for a total of £270,000 after failing to treat customers fairly when selling payment protection insurance.
There are a number of reasons why everyone in the insurance market should warmly welcome such action. In the first instance it is a clear statement of intent to protect consumers and ensure they are not getting a raw deal when it comes to buying insurance.
However it is also hugely important for the industry as a whole that those outside of the market, selling insurance as secondary or tertiary products, do not devalue the industry and damage the reputation of the market where we operate as our primary concern.
It is unpalatable to think of people operating in other retail ventures, hijacking the insurance market to well their own immediate profits and, through their own poor practice, damage payment protection insurance’s reputation further.
Hopefully the FSA will also show as much enthusiasm in looking at dealing with some of the major credit and payment protection insurance providers within the market during 2007 where are also perpetrating poor practises and procedures but to date have not been held to account in nay meaningful way.
In the New Year the Office of Fair Trading in is set to formally announce the referral of the payment protection insurance market to the Competition Commission and, in time, this should deliver further improvements to the structure of the market and the availability of insurance for consumers.
Those providing insurance should be fully aware of the responsibilities they bear and the FSA is so far doing a good job in bringing these responsibilities to the forefront of people’s commercial considerations.
Given that there are a number of other payment protection insurance cases pending in the pipeline, it seems certain that the FSA will continue forward as before and, as it gathers and builds on the momentum created in 2006, I firmly believe 2007 will begin to see payment protection insurance improve on its performance of the recent past and see practitioners both within and without the insurance market get their act together. Long may it continue?
Simon Lance Burgess LL.B.
Managing director
British Insurance Ltd
