PPI: time is not of the essence

Speed of process is key in the financial services markets and providers and brokers are looking to deliver insurance to clients faster and more effectively than ever before.

Even in the realms of commercial insurance, where contracts have notoriously taken months to come into being, huge amounts of work are being done to ensure the appropriate paper work is in place along with the commencement of cover.

However, the problem in the payment protection insurance market is slightly different. It is not one of paperwork or getting the contracts out to insureds but one of ensuring those signing up to the contract are getting a fair return for the money they are investing. In too many instances across the PPI market this is not the case. Policies are being sold to individuals who already have cover through other insurances they hold. Policies are erroneously sold to people who will never be able to claim because of the terms and conditions of the contract. Policies are generating inflated profits for insurers because they are designed to meet the needs of the provider and not the policyholder.

A lack of competition means that insurers are under no pressure to perform to the best of their abilities and deliver lean, well designed and well serviced products to their clients. Brokers selling protection cover are also failing to search out the best cover for clients and are often operating single supplier deals and offering the same cover to all of their clients despite what else might be available.

All of the above are complaints and criticism that have been levied against the market by the Office of Fair Trading and the Financial Services Authority. The OFT was so dismayed by what it found in the PPI market that it has now referred it to the Competition Commission for further investigation. Change is not coming quickly enough. There are anything up to 7.5 million PPI policies sold each year and, given the findings from the FSA and the OFT, it does not seem unreasonable to assume that a large percentage of these clients are being mistreated by insurers and intermediaries.

When there is such scope for customer detriment we should be striving to improve the situation as hard as we push for faster process and products. However this does not make everyone involved quite so much money and so, while the faults are there for everyone to see, the wheels of due process continue turn too slowly towards improvements and more and more clients in the PPI market lose out.