Press Release

FLA OFFERS PPI EVIDENCE TO THE COMPETITION COMMISSION

2 March 2007
 
The Finance & Leasing Association (FLA) has today responded to the Competition Commission’s call for evidence in its investigation into payment protection insurance (PPI).

While recognising that there are some valid concerns, and that not everyone who takes out PPI is satisfied with the product or the service they receive, it is important to note that FLA members are continuing to respond to these concerns and updating the way that they offer PPI to customers.

FLA’s Lending Code, which is binding on all members and was recently held up as a strong consumer code by the Financial Ombudsman, includes, and has included for many years, a section on PPI. Members must inform consumers that the purchase of insurance is not compulsory; that they are offering suitable insurance products; and that the consumer is aware of their right to cancel any policy taken out.

Members have gone further. For example, they have:

• changed their documentation to better explain how PPI works;
• improved their sales processes including scripts and verbal communication;
• improved staff training and auditing processes;
• made improvements to refund methodologies and procedures;
• improved the PPI product itself;
• initiated programmes with motor dealerships and retailers to increase levels of professionalism in selling.

Commenting on the submission of FLA’s evidence to the Competition Commission, FLA Director General Martin Hall, said:

“We are committed to help the Competition Commission’s investigation in any way that we can. But the Commission needs to be aware that this market has experienced and is experiencing great change, and to be sure that once they have concluded their inquiry, the market hasn’t already corrected itself.

“FLA is also doing its part to inform consumers – informed consumers lead to better competition. We have drafted a Consumer Guide to PPI, which we envisage will help both advisers and consumers to a greater understanding of the PPI product, its features, and its limitations.”

The FLA also continues to work with the Financial Services Authority (“FSA”) to further increase the fairness and transparency of these often valuable insurance products.