The Financial Services Authority (FSA) is to
increase the consultation period for its review of the payment
protection insurance (PPI) market by a further six weeks.
All interested parties will have until 22
April to send further comments to the FSA about its proposed
remedies to the way sales of PPI are regulated.
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CP response
The move comes in response to feedback to a previous FSA
consultation paper on proposals for regulating PPI sales, which
attracted a “very critical” response from the industry, although
the responses from consumer groups were “very supportive”, the FSA
said.
Financial research company Defaqto warned that
compensation for consumer PPI complaints could cost the industry up
to £3 billion. Motor dealers which sold PPI alongside car finance
agreements could find themselves on the hook for a share of this
figure – especially dealers which sold single-premium policies,
which were particularly criticised by the FSA.
Defaqto insight analyst Ben Heffer commented:
“[Single-premium policies are] the class of business which
attracted most complaints. If dealers are found to have mis-sold
the policy they could be responsible for reimbursing the whole
premium – not just the commission they earned on the deal.
“Further, the FSA require a root cause
analysis, and if other clients – who may not have complained – are
affected, they have to be reimbursed too.”
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