Following on from its statements of 30 September 2008 and 20 January 2009 (see our previous blog on this statement here) suggesting firms may wish to stop selling single premium PPI, the FSA has sent a letter to CEO’s requesting that if they have not already done so, to stop selling single PPI with unsecured personal loans as soon as possible and in any event no later than 29 May 2009.

In response to the Competition Commission’s (the Commission) final report into the PPI market which was published on 29 January 2009 (see our previous blog here), the Financial Services Authority (FSA) has considered the measures proposed by the Commission and as a result has clarified its own handbook rules for a firm selling PPI contained in the Insurance Conduct of Business sourcebook (ICOBS). 

The CC’s Final Report (the Report) was published on 29 January 2009 and sets out the measures it feels are necessary to enhance the competitiveness of the PPI market. 

Tackling poor sales practices in respect of payment protection insurance is a continuing priority for the FSA, as is evident from the its ongoing work and the regulatory action taken against 20 PPI providers in 2008 (see our most recent post here). The FSA has welcomed the decision by Alliance & Leicester, Barclays, The Co-Operative Bank, Lloyds Banking Group (including Lloyds TSB, Halifax and the Bank of Scotland), and RBS/Natwest to stop selling single premium PPI with unsecured personal loans by the end of January 2009. 

The FSA has fined British bank Alliance & Leicester plc (A&L) a record £7 million over regulatory failings relating to telephone sales of payment protection insurance (PPI) to customers seeking personal loans. 

Since 2005, the FSA has been carrying out a thematic review of the sale of PPI, the principal aim of which is for firms to improve their sales standards. The third phase of the FSA’s thematic review on PPI involved a mystery shopping exercise in respect of face to face sales of PPI alongside unsecured personal loans. 

Five motor dealers have been fined more than £175,000 by the FSA for breaches relating to the sale of PPI alongside motor finance (See: FSA fines five motor dealers for PPI failings). A total of 2175 customers were subsequently put at risk as a result of these breaches.