FSA Investigates PPI

Financial Services Authority has always been helpful in enforcing rules and regulations in the United Kingdom's financial services industry. It would have been almost impossible to control the excesses of financial institutions if there was no controlling authority to monitor their activities.

Payment Protection Insurance or PPI has become a major bone of contention between the financial institutions and the FSA. People have become increasingly wary of the negative aspects of PPI as it has failed to protect the rights of the consumers and has become an effective tool for extorting money. Personal loans, of course, were a major target of PPI scams as UK saw an unprecedented craze for new electronic items, among other consumer durables. Most people preferred to buy these items through personal loans as they were easily available and without any strict terms and conditions.

The problems with PPI started when companies selling consumer durables started attaching PPI with every item sold and without informing the customers of this phenomenon. Many unsuspecting customers were shocked when they found that they have to pay insurance premiums as they were bound under a PPI agreement to do so. This agreement, as mentioned earlier was illegal, as the consent of the customers was not included in it. When some customers failed to pay the premium, they were forced under the PPI regulations to pay penalties, among other dues.

These customers ultimately took the matter to FSA as they found it to be entirely illegal process to trap customers into complicated and more importantly, unannounced agreements of PPI. FSA was reluctant to hear these cases in the start as there was not enough proof of any gross misconduct on part of consumer durable companies or financial institutions. However, the increasing number of complaints forced the apex authority to probe into the matter.
FSA, as expected, ordered an inquiry over the matter and halted the process of selling PPI to persons with unsecured personal loans. This step, in its own rights, stopped the flow of PPI as many companies started to hold back their PPI programs instead of continuing with a brisk business of selling PPI.

The investigation ultimately led to more restrictions on the PPI insurance plans in February 2009 and imposed an ultimate ban on selling PPI to people with unsecured personal loans. After this initial action, FSA retreated back into its working as it had to deal with many other financial disasters, including the worsening condition of economic crisis.

However, PPI insurance procedures have remained murkier and many customers are still not satisfied with the working of the system. FSA, however, has refused to take any further action as the Office of Fair Trading (OFT) has already started an inquiry into the functioning of PPI and its implications on the customers. FSA might look into the matter once OFT presents its final report. Until then, there are hardly any chances that PPI claim policies and the related scams and malpractices will be investigated by the FSA.