British Money owner Simon Burgess has decided to quit the PPI industry because the FCA’s clampdown on the sector made it impossible to sell the product.
Mr Burgess confirmed that his decision for British Money to leave the PPI market was the culmination of several months of difficulty. He said his disenchantment with the financial services sector related to the development of British Money’s Universal Cover product with Cigna in 2013.
Although the product was “PPI with all the ‘weasel’ clauses removed”, and after launch in January 2014 it received a five-star rating from Defaqto, there was no appetite for it.
“Despite approaching every major retail bank and building society with the product, I received rejections, which were typified by one from a major retail bank telling us categorically that no bank is prepared to sell PPI ‘until we are forced to do so by the FCA, as it is far too risky. We would not get it signed off by the board’ ”, he explained.
Mr Burgess said the advisers contacted stated that PPI was “toxic” and they did not want to run the risk of being referred to the ombudsman and being penalised for selling the product.
The last straw was the FCA’s decision on 2 October to consult on proposed rules and guidance concerning the handling of PPI complaints in light of the November 2014 decision by the Supreme Court in Plevin v Paragon Personal Finance Ltd. The Plevin case centred around perceived commission bias and disclosure on PPI product recommendations.
Mr Burgess said: “Believing that PPI was being unfairly singled out as a product, and explaining that other cover such as extended warranties also pay way more than the 50 per cent commission level indicated in the Plevin judgement, my son Alexander wrote to the FCA.
“On 2 October 2015 Mr [Alexander] Burgess received a response from David Cross of the FCA stating that ‘the proposed rules and guidance only concern the fair handling of PPI complaints’. We decided to exit the market then.”
According to Mr Burgess, his future now involves developing telematics for cars – a form of black box meant to provide more accurate information for insurers.
FCA right to reply
A statement from the FCA said: “The FCA will publish its consultation paper on the deadline for PPI complaints, and on rules and guidance, in light of the Plevin decision before the end of 2015. The consultation paper will include full details of the various proposed rules and guidance, the evidence we have assessed, our reasons for proposing them, and our assessment of their costs and benefits.
“We will continue to monitor firms’ handling of PPI complaints under our current rules. We expect firms to deal with PPI complaints promptly and fairly. We will take action where firms fail to do so.”