The FSA has set a 17 March deadline for firms to get their houses in order, following concerns over ICOB compliance, pricing structures, transparency and levels of competition in the PPI market.
The regulator has stated that unless improvements are made, it will seek to impose its own actions ranging from clarifying the sales process, to separating the sale of insurance from core products.
However, in a memorandum, the CML said the changes recommended for PPI would not go far enough to placate the regulator’s intentions to intervene – a move Simon Burgess, managing director of britishinsurance.com, had expected.
Burgess said: “This comes as no surprise and having warned the market and seen little in the way of improvement, the regulator is at last bearing its teeth. Hopefully the PPI market can avoid being ‘nannied’ further by the regulator and sort itself out.”
“However, there have been countless examples in the past where financial markets have not been mature enough to deal with their problems and found themselves facing outside intervention,” he added.
Harry Katz, principal at Norwest Consultants, said: “Although I think the single premium version is iniquitous I certainly have never been a devotee of mortgage payment protection insurance of any type. It would appear that the regulator looking at this product and a survey by Paymentshield revealing the added burden of regulation is leading to a diminution of the take-up of this policy.
“I find this odd as under MCCB regulation one was considered more or less in breach if the product was not recommended or even at least mentioned.”
