Lenders aren't getting the message on PPI mis-selling, says the FSA

Credit card, loan and mortgage providers are still mis-selling payment protection insurance (PPI) despite warnings and a series of regulatory fines, according to the Financial Services Authority.

The FSA carried out "mystery shopping" exercises to examine the way in which 150 firms sold PPI. It found widespread failings.

In particular, the City regulator was alarmed that providers weren't outlining the cost of policies and what they actually covered.

PPI is meant to pay out if someone is unable to meet the repayments on their credit card, personal loan or mortgages, usually if they fall sick of lose their jobs.

However, the cover has been criticised by consumer groups and the Office of Fair Trading for offering a poor deal and containing unfair terms and conditions. It has been estimated that PPI sales boost bank and insurer coffers to the tune of £5bn a year.

The FSA has been striving to clean up the market for the past two years. During this time it has fined five firms over £1.5m in total.

But following its latest shopping exercise, more fines and enforcement action may follow. "While some progress has been made by the industry, we are extremely disappointed that some firms have still made little progress in improving their sales practices," said the regulator.