With the TCF deadline set for March 2008, Sarah Wilson, director of TCF at the FSA, admitted that its September review into PPI had forced the regulator’s hand and how the sector interacted with TCF.
She said: “2008 is a significant year for the industry’s work on TCF. It is going to be a year of challenge, but also one of opportunity.”
She added: “Continuing poor PPI sales practices could suggest that although TCF is being implemented in firms, the necessary TCF outcomes are not being effectively communicated, delivered and tested throughout the organisation and with front-line staff – an absence, in other words, of a TCF culture.”
Wilson outlined six outcomes – culture; product design; information and advice; product performance; and no reasonable barriers – with which the FSA would be reviewing PPI.
Shane Craig, director at Paymentcare.co.uk, said: “Single premium loan PPI is yet again the form of PPI associated with a lack of TCF. As Wilson highlighted, how can selling a single premium PPI policy of a five-year duration be an example of TCF if the firm knows its customers are likely to consolidate or refinance their loan only three years into the contract?
“Given the stats this week from the Council of Mortgage Lenders on repossessions and the Chartered Institute of Personnel and Development’s estimate that 40 per cent of firms expect to make redundancies in 2008, it is imperative that advisers do not shy away from offering appropriate forms of mortgage protection.”
