Consumer groups were quick to criticise yesterday's announcement by the Financial Services Authority that it will embark on another six weeks of consultation with the providers of payment protection insurance over its plans for a regulatory crackdown on the policy. And while there is nothing wrong with a watchdog taking some time to ensure it gets things right, it's easy to see why bodies such as Which? are so concerned.
Already, the FSA seems to be backtracking on its previous plan to force PPI providers to re-examine 185,000 rejected complaints made by customers in the context of tougher guidance now in force concerning the sale of such plans. And one also detects hints that the regulator may not force the PPI providers to hand over quite so much compensation in cases where they are at fault.
The FSA has a duty to regulate in a proportionate manner and there are legal limits on its powers (one reason for the delay announced yesterday is that the regulator wants to seek a better understanding of these). But that accepted, it is worth remembering why PPI has become such a cause célèbre: tens of thousands of customers buying the cover have been overcharged for policies they never had any hope of claiming against.
Don't take my word for it. In the year to the end of last March, the most recent period for which figures are available, the Financial Ombudsman Service received 31,000 complaints about PPI. It has consistently ruled in favour of consumers in between 80 and 90 per cent of cases. That is not a record of which the industry can be proud.
So, let the FSA take all the time it needs to make sure its PPI proposals are watertight legally. But the delay must not turn into a U-turn on any of the key recommendations.Reuse content