Opinion: There is an opportunity to develop high quality products to fill the PPI vaccuum

It would be wrong to ignore what we can learn from PPI and its demise

In November, the Financial Services Authority (FSA) issued guidance to providers of payment protection products, in a bid to avoid a repeat of the mis-selling scandal that enveloped payment protection insurance (PPI). Nick Jones, brand and marketing manager, Exeter Family Friendly believes that there is an opportunity to develop high quality products that fill the vacuum left by the disgraced product.

"There is no doubt in my mind that the payment protection insurance (PPI) mis-selling scandal has left a gap in the market; a gap which will leave many consumers even more under-protected and with few options when it comes to buying an entry-level protection insurance plan. Unfortunately, while there can be no arguments about some of the problems inherent in the PPI market, ultimately the huge sales are proof that simple protection products can reach mass market appeal if they are easy to access and buy. I think it would be wrong to ignore what we can learn from PPI and its demise and to pay no attention to lessons which could help us enormously in the long-term. 

"PPI is a difficult void to fill. Firstly, any product that looks similar is going to come under a great deal of scrutiny and not just from the FSA but from the toughest regulator of all, the consumer. The closest natural replacement for PPI is income protection (IP). However, there are some obstacles to remove.

"Firstly, it can be complex to buy and even more complex for advisers to sell. Secondly, the cumbersome and slow application process is a consistent frustration to all involved, so we need to streamline the process so it’s closer to “buy” than “apply”.

"In an ideal world, all consumers would engage with a fully-tailored comprehensive IP solution, but this is highly unlikely, so we need to be better at developing more pragmatic solutions that are easier for advisers to sell and easier for customers to buy. However, any compromise that is made needs to be communicated clearly - it’s fair to say that as an industry we haven’t been great at this in the past."


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