FSA enforcer warns the regulator is on the warpath following record fine to credit card insurer CPP
The FSA today delivered a chilling warning over low cost insurance in the wake of the £10.5m fine to a credit card insurer for mis-selling products.
The regulator has had its eye on low cost insurance products for a year, and it used this latest fine as a way to warn the insurance industry to get its act together.
It will be of particular concern to insurers that sell add-on products, which are under the spotlight for being too expensive and difficult to understand.
FSA director of enforcement and financial crime Tracey McDermott said: “We have highlighted before our concerns about low cost insurance that offers little or no value to the customer. This case shows the action we will take if our warnings are not heeded.”
The FSA was particularly concerned about the way Card Protection Plan (CPP) tried to push customers into buying low cost insurance for products that they didn’t even need, such as insurance for credit card fraud.
McDermott added: “While CPP’s products were relatively inexpensive, they were sold widely and CPP encouraged its sales agents to be overly persistent.
“This exposed a very large number of customers to the unacceptable risk of buying products they did not want or need. Further, we had already warned the firm that it might be misleading customers about a feature of card protection from which customers were unlikely to benefit, but insufficient action was taken to rectify this.”
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