The Financial Services Authority is carrying out a review of payment protection insurance after finding several examples of policies not clearly stating that they include nil-refund terms.
The authority has said that several providers stop consumers from getting any refund if they repay their loan early outside the statutory cancellation period, and believes that if the refund terms are unfavourable to the consumer, that it should be 'raised as a serious limitation of the policy and be included in the key features document'.
The investigation has so far resulted in several firms, including Norwich Union Insurance, AmTrust International Underwriters, PPI and St Andrews Insurance amending their policy wording.
Our view
This is a dificult area and brokers and finance houses involved in this market need to be mindful of the regulator watching very closely.