FSA Calls For Improvements in Industry in Relation to PPI

Financial Services Authority (FSA) is the ultimate deciding authority when it comes to financial matters and institutions in the United Kingdom. FSA acts as a regulator and keeps watchful eyes on the proceedings of banks and other financial entities. Although the apex regulator keeps on issuing directives regarding different practices of these institutions, it hardly takes an active part in defining and adjusting the state of financial affairs in the UK.

This behaviour is in accordance with the free market rules where companies are allowed to operate without any pressure as long as they are following the rules and regulations. The problem arises and FSA comes into play when any of the stakeholders violates these agreed-upon rules and regulations.

One of the recent examples of FSA intervention in the affairs of banking and insurance industry can be seen in the Payment Protection Insurance sector. Commonly known as PPI, this type of insurance is used to safeguard the rights of those people who take personal loans to buy consumer durables, among other things.

Although no company is allowed to sell PPI without the knowledge of the customer, many companies in the UK started selling PPI to unsuspecting customers. Additionally, they also misguided those who were aware of PPI, but were not educated about its adverse effects.

FSA has called for improvements in the financial industry, especially its dealings with the PPI cases. As a first step, FSA put a ban on the selling of PPI to unsuspecting customers and those with unsecured personal loans. The suffering customers took this step in February 2009 in response to thousands of bankruptcies and complaints.

Before that, companies and financial institutions were free to sell PPI to anyone and without informing him or her of its pros and cons. Now they are unable to even advertise their PPI plans as the FSA has found serious discrepancies in the whole system of PPI sales.

FSA has also directed the companies to improve the process of selling PPI to valid customers. These companies have to brief the customers about every aspect of a PPI along with its payment plans and other options. Additionally, no company can force a customer to buy a PPI plan along with a consumer durable. He or she will have the discretion to accept or reject a plan or ask for further details.

Despite these precautionary steps and measures, PPI remains a confusing issue for many customers and they are still facing troubles in this regard. Given the increasing public outrage against PPI and its ineffectiveness in dealing with consumer protection, some quarters in the UK have started voicing their concerns about its validity. They are asking to put an end to the whole concept of PPI. However, FSA has not yet decided on this case as the Office of Fair Trade (OFT) is already looking into the matter. The outcome of that investigation will ultimately decide the future of PPI.

Simon P Jennings is a financial expert. Take opinions of professionals and advise for Unenforceable Credit Agreement now at http://www.claimsadvicecentre.com

Related Honda Finance Uk Ppi Articles