Splitting Ppi Regulation Between Two Parties
Both the FSA and the OFT have a say when it comes to regulating PPI
Being the focus of various mis-selling scandals, payment protection insurance comes under the jurisdiction of two key regulators, the FSA and the Office of Fair Trading.
The OFT has the lead role in considering whether markets are working well in terms of delivering value for consumers, whereas the FSA has the lead role on consumer protection for payment protection insurance and other insurance products.
However this can overlap, with payment protection insurance product promotion being one example of an activity that will require firms to deal with different sets of regulators. The FSA authorises payment protection insurance providers and intermediaries and regulates product disclosure and the sales processes. The FSA's TCF initiative also covers payment protection insurance promotions.
The Consumer Credit Act then regulates, through the OFT, the form and content of credit advertisements and credit agreements and can impact on how the product is sold.
Since 14 January 2005, insurance intermediaries have been subject to the insurance mediation directive and provides for the FSA to have responsibility for the regulation of insurance intermediaries in the UK.
In December 2007, the FSA published a feedback statement in response to new insurance rules, a successor to Icob. The new Icob rules came into effect on 6 January 2008 and firms were given a six-month transitional period to comply with the bulk of requirements.
The main deadlines for firms to complete the transition of their documentation and processes relating to payment protection insurance are 5 July 2008 and updating initial disclosure documentation by 6 January 2009.
The FSA has also published additional rules for protection products, which are designed to improve selling practice.