FSA to scrutinise PPI insurance schemes

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The selling of insurance policies that cover the repayment of loans when people fall ill or are unemployed will come under fresh scrutiny in the next six months, Britain's financial regulator said yesterday.

The Financial Services Authority (FSA) said it would test whether sales practices have improved in the much-criticised payment protection insurance (PPI) industry, which is estimated to be worth £5.5bn a year.

The FSA said the work would include mystery shopping and an extensive programme of follow-up with firms whose practices were earlier identified as deficient as well as visits to a sample of firms not previously visited.

"Customers should come away from the sale having been given the best possible chance of understanding that PPI is almost always optional, what the policy will and will not cover, and how much it costs," said Clive Briault, FSA managing director of retail markets.

The regulator said it would also review its current rules on PPI. The FSA has targeted PPI as a priority area due to the potential risk of the mis-selling of products.