Following the Citizens Advice Bureau’s (CAB’s) recent report on the selling of payment protection insurance, Select & Protect is backing the Financial Services Authority’s (FSA’s) review of PPI and its announcement that it is to determined to improve standards.
Bruce Reid, managing director of Select & Protect said: “Payment protection insurance is sold to borrowers to offer peace of mind and reassurance that repayments will be covered if they fall on hard times. However, the industry is witnessing more and more situations where high pressure sales or inertia selling are used to force people to take out insurance that they cannot afford, do not want or need, and cannot benefit from. We welcome the FSA’s review of the way PPI is being sold, unfortunately these problems aren’t new and the situation needs to be addressed before more damage is done to the reputation of the insurance industry”.
The CAB report, published at the start of Advice Week 2005, states that insurance sold to cover credit payments in the event of illness or job loss is often very expensive, miss-sold to people who cannot possibly claim on it, and designed to exclude many of the most common situations that can lead to debt problems. The report also highlighted that borrowers have found that they cannot make a successful claim on policies because of exclusion clauses and administrative barriers to making a claim.
Although the report has published disturbing news on some areas of PPI and is creating a negative image for the industry as a whole, Bruce believes cautious intermediaries shouldn’t dismiss general insurance all together. “Whilst the FSA review will cover the overall credit and payment protection market, and I believe MPPI will not be overlooked, it doesn’t mean intermediaries and brokers should cease advising and selling the valuable protection that MPPI affords, as long as the product is right and the sales process is compliant.
“Through the launch of Intego, our latest MPPI offering, for example, we have provided our intermediary partners with a comprehensive process to deliver a compliant sales process using our simple and easy to use software. Additionally, Intego is a unique age-banded product that gives customers a much fairer deal based upon their age, and covers two of the conditions – backache and stress, that many policies exclude and are often the source of many of the complaints the CAB has highlighted.”
