PPI more likely than any other product to be mis-sold
Consumers are more likely to be mis-sold and ripped off by Payment Protection Insurance than any other financial product, warns Simon Burgess from independent PPI provider British Insurance.
Burges concerns are fuelled by yet another fine from the Financial Services Authority for PPI mis-selling – this time a £1.085million ‘knuckle rap’ to HFC bank, part of the HSBC group, who failed to ensure customers received suitable advice between January 2005 and May 2007.
The FSA condemned HFC for ‘not requiring advisers to gather sufficient information about customers’ circumstances or taking sufficient information into account when considering whether PPI was suitable’ and concluded ‘HFC put its customers at an unacceptable risk of being sold PPI when it was not suitable for them’.
Burges said: “This feedback clearly demonstrates that High Street lenders view their customers as ‘easy prey’ when it comes to selling additional products – regardless of what’s wanted.
“This is the largest PPI fine ever issued and further proof that customers are being ripped off by banks and building societies. Lenders use high pressure selling tactics to push products that are wholly unsuitable for customers - they do this because they know extra sales will increase their profits.”
The Payment Protection sector is currently under investigation by the Competition Commission for its low claims ratios, high commission rates, price differentiations and product variations and recommendations are due to be issued in the summer.
Burges added: “These recommendations cannot come fast enough. The economy is looking shaky, redundancy notices are gaining momentum and lenders will continue to take advantage of their monopoly. Consumers must be canny and shop around for cover. They need to know their policies will cover them in the event of redundancy – but for many they won’t because they’ve been mis-sold. Around 4,800 job losses have recently been announced at Electrolux, Rolls Royce and EMI and the last thing consumers need right now is further uncertainty over whether their PPI policies will pay out."
