Payment Protection Insurance
Since publication in June 2008 of the Competition Commissions proposals for increasing competition in the Payment Protection Insurance (PPI) market, the pressure on firms to change the way in which PPI is designed, marketed, sold and serviced has increased significantly.
For the first time, the business model upon which the success of PPI sales has been built is under threat; the Competition Commission is suggesting that certain common sales practices should be prohibited.
With the sector under intense scrutiny from regulators, the media, the consumer lobby and customers themselves, it would be a brave CEO that took the decision to do nothing in the face of these concurrent pressures – but what work needs to be done, when and how?
Despite the publicity surrounding the move to principles-based regulation (PBR), the FSA has amended its insurance conduct of business rules to take account specifically of the perceived higher risk posed to the TCF consumer outcomes by PPI sales. Firms should have been fully compliant with the new ICOBs requirements by July 2008 but the need for firms to be embedding TCF at the same time as complying with principle-based regulation, will have stretched firms’ capacity to deliver both effectively.
The greater challenge for firms is likely to be the integration of PPI design, sales and servicing into a coherent TCF programme that evidences that the FSA’s six consumer outcomes are being consistently delivered.
Huntswood has already worked successfully with a number of the UK’s leading PPI providers to successfully manage this regulatory change, while maximising sales effectiveness and reducing process wastage. In doing so, Huntswood have enabled our clients to maintain the fair treatment of customers, while delivering robust sales and service through skilled and knowledgeable people. Our work has included past business reviews, providing ongoing complaint handling support, assessing product and sales processes, drafting responses to the FSA, as well as skills and knowledge development.
As a result of this work, Huntswood has produced a best practice guide designed to assist firms in the development and implementation of practical solutions to address potential compliance and regulatory issues. Many of the actions highlighted in this guide will help firms to develop a strategy that ensures the fair treatment of customers and which will in turn support practices which span the entire product portfolio and distribution channels of regulated firms.
To order your copy of the Huntswood guide, ‘Payment Protection Insurance, Protecting Profitability in a Highly Regulated Environment’, please click here