Finance watchdogs are to publish new guidance to prevent the payment protection insurance (PPI) mis-selling scandal recurring in a new generation of products.
The Financial Services Authority (FSA) and the Office of Fair Trading (OFT) are consulting on proposed rules that firms should follow in relation to payment protection products which can fall under either organisation’s remit.
The regulators said it was a “key time” as the market shifts away from PPI and firms begin to develop new income protection and debt products.
The two bodies will act under their respective powers where firms risk causing harm to consumers. The FSA’s guidance stresses that firms should ensure the product reflects the people they are targeting.
Margaret Cole, FSA managing director, said: “Firms must learn the lessons of the past and make sure they have consumers’ needs at the heart of new product development.”
Complaints about PPI rocketed last year as massive publicity surrounding the issue alerted people to possible mis-selling of the insurance.
The FSA said in August that the financial sector paid out £215m in compensation to victims of the PPI mis-selling scandal in the first half of the year.