The FSA has published a series of measures to protect consumers buying payment protection insurance(PPI).
It says the reforms will ensure customers are treated more fairly when buying the product and also if they have to make a complaint.
The new measures come after a widespread review of the PPI market which saw the FSA take action against 24 firms and individuals for failings, with fines totalling approximately £13m.
Firms must implement the reforms by 1 December 2010 and the FSA will be monitoring providers closely to ensure they meet the new standards.
The measures include:
- new handbook guidance to ensure complaints are handled properly, and redressed fairly where appropriate;
- an explanation of when and why firms should analyse their past complaints to identify if there are serious flaws in sales practices that may have affected complainants and even non-complainants;
- an open letter setting out common sales failings to help firms identify bad practice
Dan Waters, FSA director of conduct risk, says: "Today is the culmination of months of hard work and now, with these measures, we look forward to consumers being treated fairly whether they are buying or complaining about PPI.
"Since we took over the regulation of PPI we have carried out 24 investigations and three thematic reviews, issued warnings, halted the selling of single premium PPI with unsecured personal loans, visited over 200 firms, and handed out some very significant fines. Now, with this package of measures we are confident we can mend a market that has been broken for too long.
"This remedy is fair to consumers and the industry alike. The onus is now on the industry to ensure it treats all customers fairly. We will be monitoring the implementation of our guidance closely to ensure real change is delivered."
The policy statement comes after consultation with PPI providers, sellers, trade groups and consumer bodies.
It backs up the FSA's commitment to reform the market and build on the agreement the regulator secured from the industry in 2009 to stop selling single premium PPI on unsecured loans.
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