The Ins and Outs of Regulating Insurance

In the United Kingdom, we are lucky enough to have one of the most envied legal systems in the world. Our common law and court system is emulated on every continent from Asia to North America and the average British citizen is immensely proud of our ethics and morals that transcend the duties of our everyday lives.  Despite some negative press, UK Financial Services Authority (FSA) performs well with major players in the UK financial sector to get them to function with the expected level of professional ethics. The mis-selling of PPI may have negatively affected our reputation in overseas markets, but confidence has been on the increase in the value of payment protection insurance.


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Insurers and Self-Regulation

Our insurance industry is regulated by the FSA, and there are guidelines in place for bankers and other lenders to use that will ensure they do not fall foul of the regulations. The FSA concentrates on factors that have been complained about consistently when claims for compensation for the mis-selling of PPI are recorded.

The complaints are usually related to one or more of the following:

1.       The sale of a policy that is not fit for purpose
2.       Poor advice at the point of sale
3.       A lack of transparency with the policy
4.       No clear understanding of the cost of a claim

The Conduct of Business Sourcebook (ICOBS) is a 465-page document that instructs professionals within the insurance sales industry how to sell financial and payment protection products to consumers. I commend the people that put this document together because they are a very comprehensive set of guidelines that far exceeds the regulatory demands made by the FSA. The problem is that the guidelines are only as good as the person who reads them and their ability and will to interpret the contents. Thanks to continued improvements in our financial institutions, there has been a lot of progress in adhering to FSA guidelines in recent years. The PPI industry has benefit mostly because of changes introduced because of the Competition Commission and its findings when investigating the cause of so many complaints.

Increasing Self-Regulation

The problem we have as consumers is that we did not know if we were paying for a good service from a reputable institution. There are now statistics available because of the Competition Commission’s findings, which show exactly how competitive a PPI provider is on quality as well as price. In the past, consumers often needed to make a decision about taking PPI without being able to perform any research in to the product. Thankfully, there are no longer point-of-sale insurance policies sold with credit agreements. The amount of training that each employee has concerning PPI has also increased the percentage of suitable policies sold.

Being Made to Make Amends

There have been moves by the FSA to encourage the major lenders and banks to contact consumers that may have been mis-sold payment protection insurance. While this is very commendable, there are always those people who may not be contacted because of a change in their situation, which could be anything from a different address through to a different living arrangement with their one-time partner. Many more factors could make contacting previous customers difficult no matter how good the intentions may be. The safest way of ensuring a claim is processed within time limits, is initiate contact directly instead of waiting notification.

If you have been a victim of a mis-sold PPI policy, use a reputable agent, Gladstone Brookes to ensure your compensation claim is handled properly.

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