PPI has been coming in for criticism in the media recently. We thought it was time to get the industry’s response.
Drazen Jaksic, sales and marketing director of Assurant Solutions, took the time to exclusively tell us that ‘PPI has never been more important than it is in the current economic climate.’
This is because the schemes are seeing a massive increase in unemployment claims.
‘According to the Association of British Insurers, November’s figures rose by 118 per cent compared to the same period last year.’ The introduction of a point-of-sale ban ‘will benefit neither consumer nor PPI provider.
‘The fact that, in its final report, the Competition Commission reduced the ban from 14 days to seven days is immaterial. The buying habits of consumers in motor and household markets indicate that their choice is dictated by price, not whether the cover is really suitable for their own unique set of circumstances.’
Jaksic is frustrated. ‘Does the Commission really believe consumers will proactively shop around, let alone select the right type of cover to protect their credit arrangement?
‘Given that the Commission’s remedies will make the sale and fulfilment of PPI difficult, it is feasible that many providers and distributors may write off PPI sales and any associated historic financial benefits, and stop selling the product altogether.’
The motor industry could be one of the sectors most affected, he said.
‘A car dealer typically has a much shorter relationship with the customer than, for example, an independent financial adviser, who can more easily re-solicit the customer.’
And the sums of cash involved are huge. ‘FLA members were responsible for £19 billion of the motor finance in 2007.
‘If PPI providers and distributors drop out of the market, who is going to protect this finance in the future?’
The consumer, as a consequence, will be left with less choice than ever before. And this, says Jaksic, is bad news for everyone concerned.
Exclusive by Richard Aucock