Britain’s financial and competition watchdogs said they joined together to help prevent banks from improperly selling “a new generation of products” after customers lost money on sales of payment-protection insurance.
The U.K. Financial Services Authority and the Office of Fair Trading will propose guidance for companies selling payment-protection products after consulting with interested parties until Jan. 13, 2012, the regulators said today in a statement. Such sales fall within the jurisdiction of both regulators.
“This is a key time as the market shifts away from PPI and firms begin to develop new products or product features -– such as short-term income protection, or debt freeze or debt waiver as elements of a credit agreement or mortgage,” the OFT and FSA said in the statement.
U.K. banks paid out as much as 215 million pounds ($342.2 million) in the first six months of 2011 in compensation for misselling of the insurance, known as PPI. Customers rarely compared prices and terms or switched providers and usually weren’t aware they could buy it from a firm other than their lender, the U.K.’s Competition Commission has said.
The FSA introduced rules in August 2010 after it found financial firms reject more than half of the complaints about PPI that they received. The insurance covers payments on credit cards and mortgages in case of illness or unemployment.
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