Helping Peter Piper pick a peck of payment protection products

With claims over toxic payment protection insurance still pouring into banks and the ombudsman, the Financial Services Authority and the Office of Fair Trading have responded to concerns about similar emerging products by releasing joint industry guidance. Charlotte Hill and William Maycock provide a synopsis for compliance officers of the expectations outlined by the FSA.

Charlotte Hill is a partner and William Maycock an associate in the financial services and regulation team at law firm Stephenson Harwood. Contact Charlotte and William at charlotte.hill@shlegal.com and william.maycock@shlegal.com.

Towards the end of January, the FSA and the OFT issued further, finalised, joint guidance on payment protection products (PPP). The object is to help firms designing new PPP to avoid making the same or similar mistakes that led to the payment protection insurance (PPI) scandal of recent years and which has cost the financial services industry billions in redress to date. In unveiling the new guidance the FSA stated, "New payment protection products may offer benefits to customers but, if not designed and sold with consumers' interests in mind, may pose risks similar to PPI. The previous failings in relation to PPI must not be repeated."