Finance firms can no longer automatically offer payment protection insurance after the FSA changed how the products are sold over the internet.
Previously, techniques such as a ‘pre-ticked’ box led to many customers taking up PPI, without actively choosing to buy it.
But firms have agreed to change the process, ensuring clients make a choice about PPI.
FSA retail themes director Vernon Everitt says the regulator made PPI purchasing clarification a “top priority”.
“Naturally, many customers are focused on getting the loan itself, but it is just as important that they also think about whether or not they want to protect their loan repayments by taking out PPI cover,” he says.
"This change means that it will be up to the customer to actively choose to buy PPI rather than it being sold automatically."
This is the latest in a number FSA changes to PPI.
In March, the regulator and a number of trade associations secured an agreement on greater fairness and transparency in refunds of single premium PPI policies; while last month the FSA proposed changes to its Insurance Conduct of Business rules, intended to improve selling practices on PPI and other protection products.
These are due to come into effect in January 2008, subject to consultation.
The FSA is due to report its latest PPI sales standards investigations in September 2007.
After previous investigations, the FSA says it took enforcement action against nine firms in relation to poor PPI selling practices.
“This is excellent news for consumers and yet another step in the right direction towards ensuring they receive the fair treatment they expect and deserve.
“Resisting the powerful profit-driven force of the big firms is a tough job but the tide is now beginning to turn in favour of the consumer.
“It’s still quite some time before the Competition Commission brings its enquiry to a close so this move will go a long way towards ensuring customers only buy what they want and what they can afford.
“It’s also a very positive move for the image and reputation of the industry and will help to ensure that the people who really want protection will no longer be scared off.”
Shane Craig, Paymentcare.co.uk managing director.
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