uSwitch.com comments on the FSA's update on its review of the sale of Payment Protection Insurance

Simeon Linstead, Head of Personal Finance at uSwitch.com, comments on the FSA's update on its review of the sale of Payment Protection Insurance (PPI):

"The damning findings in this review should highlight the fact that only a heavy-handed approach by the FSA will work to successfully stamp out PPI mis-selling practices.

PPI is no doubt a valuable product if it is sold to the right people in the right way.

However, as this review shows, this still isn't happening.

In the current climate many consumers that are fearful about their job security could be tempted to panic buy this product.

The danger here lies in not fully understanding the product and if it is suitable for the individual's needs.

"However, the mystery shopping exercise does indicate that progress has been made with 92% of shoppers stating that the salesperson told them the product was optional and over 80% not feeling pressured to buy it.

However, it is still far from acceptable that there has been little or no improvement in three remaining areas which include the disclosure of price and policy details, as well as firms' consideration of eligibility and suitability.

While 87% of shoppers were told how much PPI would cost them each month, only 62% of shoppers were told how much PPI would cost them in total over the term ofthe loan.

Almost half of the shoppers said that they were not told whether the PPI sale was on an advised or non-advised basis.

Of those that were told the basis of the sale, a few were given incorrect information by the salesperson.

In relation to the written documentation firms gave shoppers, only half were given a policy summary and less than half were given a compliant Statement of Price.

Only 26% of shoppers said they were told of the importance of reading the documentation.

In less than half of shops shoppers said they were told about thepolicy limitations and exclusions.

Only 28% were asked in some way about their health,despite the accident and sickness element of PPI cover typically not covering claims resulting from an existing medical condition.

Only one third of shoppers were told their statutory cancellation rights.

Key failings highlighted by the report: While 87% ofshoppers were told how much PPI would cost them each month, only 62% of shoppers were told how much PPI would cost them in total over the term of the loan.

Almost half of the shoppers said that they were not told whether the PPI sale was on an advised or non-advised basis.

Of those that were told the basis of the sale, a few were given incorrect information by the salesperson.

In relation to the written documentation firms gave shoppers, only half were given a policy summary and less than half were given a compliant Statement of Price.

Only 26% of shoppers said they were told of the importance of reading the documentation.

In less than half of shops shoppers said they were told about the policy limitations and exclusions.

Only 28% were asked in some way about their health,despite the accident and sickness element of PPI cover typically not covering claims resulting from an existing medical condition.

Only one third of shoppers were told their statutory cancellation rights.

"Shockingly, over two thirds of firms could not demonstrate that they had taken sufficient steps to ensure their sales process meets the required standards.

uSwitch.com encourages the FSA in its commitment to flex its muscles and intensify its regulatory intervention, to send a clear message to firms that improving PPI sales is not optional.

Pressure on firms must be unrelenting as, with the TCF deadline fast approaching in December and another update on the third phase of the FSA's work expected in early 2009, there is a great deal of work to do in a relatively short space of time.

"As the FSA's investigation has regrettably proved, mis-selling is still rife across the industry.

Consumers must take every opportunity to educate themselves about all aspects of a PPI product before signing on the dotted line.

We recently saw Liverpool Victoria Banking Services being fined ?;840,000 for mis-selling PPI - the question is now, who will be next?".

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