FSA
The Financial Services Authority (FSA) has cut the red tape in its
Insurance Conduct of Business (ICOB) sourcebook, a move hailed as
indicative of a shift towards “principles-based regulation” by Dan
Waters, the FSA’s director of Retail Policy and Themes.
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However, he singled out payment protection insurance (PPI) as an
area where new rules will be introduced, as a result of “continuing
market failures and consumer detriment”.
Waters said: “Some of these new measures will apply to all
protection products including a new standard to ensure better oral
disclosure of key information about policies to help consumers make
informed purchasing decisions.
“There will be a stronger framework of rules to back the FSA’s
drive to improve selling standards in PPI markets. As well as oral
disclosure, this includes increasing the existing cancellation
period of 14 days to 30 days and a new rule requiring firms to
establish that customers would be eligible to claim
benefits.”
The new rules will come into effect on January 6 2008, with a
six-month transition period for firms to update their processes.
All companies selling PPI – and other forms of insurance – will be
expected to be compliant with the new regime by July 6 2008.
Finance & Leasing Association director-general Stephen
Sklaroff gave a cautious welcome to the news. He said: “The FSA
rightly recognises the need to avoid burdening consumers with
complicated or indigestible information, and this is reflected in
some aspects of their proposed PPI rules.
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By GlobalData“But the industry and its customers now need some regulatory
certainty, and it is important that the Competition Commission
takes full account of the impact of the new FSA rules as it
continues its own inquiry into the PPI market.”
