Big news this week is the likelihood that the Judicial Review decision will be handed down on Wednesday (tomorrow). I expect the decision will provide an element of clarity on the state of PPI complaints, but its still likely to be appealed to a higher court.
The Financial Services Compensation Scheme has this week set the 2011/12 levy on general insurance intermediaries at £69.5m. This is the amount the industry will be expected to pay to help the FSCS meet its commitments. Last year the levy for insurance brokers rose to £61.4m - mainly due to cover the costs of payment protection insurance (PPI) claims.
Despite some reports alluding to panic that brokers wouldn't be able to cope with the increased levy, it is clear that the final levy is some £23m less than originally projected and so more palatable throughout the industry. Furthermore, with the FSCS intervening earlier in firms who are likely to go into default, there is a greater chance (as in Welcome's case of some money being set aside for future claims).
Similarly, the FOS has also had to increase its levy on the industry which has been met with some criticism from the The Association of British Insurers.
In January, the FOS confirmed it was seeking a levy increase of up to £30m.
But last week, the FSA approved a £25m increase for 2011/12 to fund reserves so the ombudsman can deal with an expected surge in payment protection insurance complaints.
The ombudsman said before the levy was introduced that the loss of income from case fees as a result of the judicial review would exhaust its reserves within six weeks. Hopefully, the extra cash will enable FOS to deal with each complaint in a more timely manner.
Alan Meale, Labour MP for Mansfield and Mark Durkan MP for Foyle have called on the government to immediately begin its promised review of the FSCS. They have highlighted the increased levy as a catalyst to scope out the potential for significant changes in the way in which the FSCS is managed.
The new rules set out by the Competition Commission to introduce competition into the payment protection insurance (PPI) market have came into effect.
It has been ruled that PPI be banned at the point of sale until seven days after the sale and has further ruled that there must be a seven day gap between a PPI quote being issued and the sale. These quotes must set out the cost of the policy along with details of the cover provided and supply information in marketing material about the cost and key messages, for example making it clear that PPI is optional and available from other providers.
It has further been ruled that providers are obligated to provide information about claims ratios and are totally prohibited from selling single-premium PPI policies. Insurers must also provide an annual review setting out the cost of PPI and including a reminder of the consumer's right to cancel.
No comments:
Post a Comment