October 1 saw the introduction of the first part of the Competition Commission’s recommendations to prevent a repeat of the systematic mis-selling of Payment Protection Insurance. But can PPI’s reputation be repaired and should the industry even bother to try?

Following the commission’s investigation, it published measures to prevent consumers being sold inappropriate, expensive products which often failed to do what was promised. Recommendations include forcing PPI providers to provide more information to customers and regulatory bodies, introducing a ban on the sale of PPI at the point of sale and a ban on single premium PPI policies.

Although most of the significant changes, such as the point of sale ban, will come into effect from April 6, 2012, PPI providers are changing their approach now as several requirements came into effect on October 1. The changes represent another step in addressing the well documented problems in the PPI market. A line needs to be drawn under PPI to restore consumer confidence in protection products generally.

But for some, PPI is almost irreparably damaged. There may once have been a place for PPI but unfortunately many that sold it did so irresponsibly and have ruined the chance of it ever coming back. It is almost like the goose that laid the golden egg. It could have been a viable product for those that sell loans if they had done it responsibly but they didn’t.

The damage to the reputation of PPI is easy to see from the claim statistics from the FOS. The most recent figures cover complaints received in the first six months of this year and show 149,925 complaints between January and June, with almost half, 98,632, about PPI.

However, the number of complaints about PPI is only half the story. When you look at a breakdown of the cases resolved, many companies’ uphold rates for PPI complaints are way over 50 per cent. This means that out of complaints the company initially rejected, the FOS is finding in the customer’s favour much of the time. The withdrawal from the PPI market of Lloyds Banking Group in July last year citing regulatory pressure and its impact on profitability shows some of the banks also think PPI has run it course.

However, there are still opportunities at this end of the protection market, particularly with products such as short-term income protection. Despite the well documented problems with PPI, the protection market still offers opportunities. The key is how advisers take advantage of the potential offered by short-term income protection and its longer term equivalent. Protection tends to be bought rather than sold but advisers are well placed to assist consumers by raising awareness of the need for protection and sourcing a package that is right for them.”

Sally Bowyer, Managing Director of financial claims specialist BrunelFranklin.com says that the public are slowly becoming wiser to the tactics of mis-selling, but that a lot of the damage is already done: “It is important to realise that we may all unwittingly have taken out PPI during the years when lenders were offering a seemingly endless line of credit in the form of loans and credit cards in particular. It costs nothing to check your paperwork for insurances that you may not even know you are paying for. PPI per se is not a bad product; however the onus is on the vendor to ensure the product is the best for your needs at the time of sale. If the best product for your needs was not offered, or if you were unaware of the true cost, for example, you may have grounds for a refund.”

Learn more about PPI refunds and find out if you could apply for a refund today! Visit the website www.brunelfranklin.com or call Brunel Franklin, free, on 0800 051 54 51.