British Insurance claims the guide is doing nothing to address the mis-selling issues and is not helpful to those purchasing cover.
With the PPI sector under investigation by the Competition Commission for its low claims ratios, high commission rates, price differentiations and product variations, the ABI along with trade bodies representing banks and building societies, published a guide in the belief it will help educate consumers and allow them to make an ‘informed choice’.
However, Simon Burgess, managing director of British Insurance, believes the ABI and its cohorts should look closer to home and tackle the root cause of this widespread malpractice by reducing the vast variations in policy cover and prices and setting out guidelines for members, rather than expecting consumers to ensure they’ve been sold the right product.
Burgess commented: “The ABI has already said many customers lack the financial capacity to process the information available and manage their financial risks, so why does the guide ask consumers to base their choice on policy summaries, benefits and main exclusions?
“Why isn’t the onus on the provider? In recent research, Which? found sales staff were not informing consumers about policy exclusions and the differing terms and conditions, so how can they be better informed?
“Key players need to reduce their commission rates, simplify their products and ditch those high-pressure selling tactics which have resulted in so many claims being rejected because policies are mis-sold.”
Since January 2005, over 15million PPI policies have been sold, taking over £11billion in premiums. The Financial Ombudsman Service has already voiced concern over the high incidents of inappropriate sales amongst the PPI cases it handles - one third of cases are generally upheld, with PPI it’s around half. And British Insurance confirms premium variations are rife with its own products 10 x cheaper for loan, 4 x for mortgage and 5 x for income protection.
Burgess added: “Consumers are being exploited by the High Street lenders’ point of sale advantage and desire to squeeze as much cash out of them as possible, regardless of whether the policy is suitable or not. Until fundamental issues are addressed, I do not believe these bodies are acting in the consumer’s best interest.”
