Proactive dealers and the peak of PPI

Karen Wagstaffe provides a handy checklist to ensure you are protected from PPI claims. The good news: At some point, PPI complaints will peak. The problem is identifying when this will happen, as each month the Ombudsman seems to report another record month of complaints, driven by heavy advertising by claims management companies.

The proactive dealer will have worked out the number of PPI cases sold since legislation was introduced to enable them to calculate their risk exposure.

Others haven’t, on the other hand, and are simply waiting to see what comes in.

In either case, dealers can help themselves by reacquainting themselves with the PPI complaint handling rules that came into effect in December 2010.

These rules are often forgotten, and if not followed correctly, will affect the decision by the Financial Ombudsman Service if a complaint is referred to it. In light of these, plus knowledge of what has happened on PPI sales in the past, dealers should ask themselves some very basic questions to help formulate and develop their compliance strategy, including:

Have we got a compliance strategy? Is it documented? Do all staff know about it?
How often does the board of directors discuss compliance matters? Are they minuted / actioned?
How effective is our current statement of demands and needs (SoDaN)? Does it address the main requirements of ICOBS? What about identifying finance suitability? Where does this fit into our process?
Do we have a file monitoring programme to audit quantity and quality of SoDaN?
Do our advisors record the customers’ comments as well as the initial fact find? Without validating comments, the full story (or audit trail) is not complete.
How often do managers conduct deal file audits? Would this be deemed to be ‘regular’? Where does this information go to?
How often are F&I reviews conducted with our finance and insurance partners to check we are meeting the Treating Customers Fairly principles.
What is our complaints management process? Do we meet the PPI complaint handling rules?
Do we conduct regular competency assessments on all advisors?
Do we have a training plan?
Do all our training staff fully understand their obligations in regard to general compliance?
How do we handle confidential waste?
For how long do we keep customer files?
Does this meet FSA requirements?

While we all have an eye on the end of 2012 as to what is likely to happen with the ‘new’ Financial Conduct Authority, it seems highly likely that general insurance compliance and CCD legislation will remain high on the agenda for most dealers when looking at F&I budgets for next year.

Dealerships that have addressed their strategy for sales, and compliance will continue to do well and should not be affected by any changes the new regime brings in – assuming, of course, they continue to identify, implement and monitor compliance activities on a regular basis in order for it to become culturally embedded.