The Insurance Ombudsman and payment protection insurance
| DOI | https://doi.org/10.1108/eb024920 |
| Date | 01 February 1997 |
| Published date | 01 February 1997 |
| Pages | 139-145 |
| Author | Peter Hart |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 5 Number 2
The Insurance Ombudsman and payment
protection insurance
Peter Hart
Received: 3rd February, 1997
City Gate One, 135 Park Street, London SE1 9EA; tel: 0171 928 4488; fax: 0171 401 8700.
Peter Hart read Modern History at Trinity
College, Cambridge, and was called to the
Bar by Lincoln's Inn in
1975.
From
1967
to
1976
he was a Senior Library Clerk in the
House of Commons providing independent
research for members on matters covered
by the Home Office and the Department of
the Environment. From
1976
he was Princi-
pal Legal Officer of East Northamptonshire
District Council until, in 1978, he was
appointed a Director of the Commission
for Local Administration (the Local
Gov-
ernment Ombudsman). In the latter capa-
city he supervised the investigation of
complaints against local authorities in
one-third of England. He was appointed
Deputy Insurance Ombudsman in February
1995. he is a visiting fellow at Cranfield
University.
ABSTRACT
Personal
general
insurance
policies are not sub-
ject to statutory regulation. There is instead a
system of voluntary self-regulation and the
question arises as to the effectiveness of this
regime. This paper explores that issue in rela-
tion to payment protection insurance (PPI) and
suggests, on the basis of complaints coming
before the Insurance Ombudsman Bureau, that
the consumer may still be inadequately pro-
tected.
The paper acknowledges the work of
the
Association of British Insurers' (ABI) Code
Monitoring Committee and the likely effect of
the June 1996 statement by the ABI on pay-
ment protection insurance but suggests that
because of the way PPI is sold it is unlikely
that there can ever be full protection for the con-
sumer. This, it is suggested, makes the role of
the Ombudsman as an
adjudicator
in default all
the more important. Equally important is the
need for the industry and the bureau itself to
publicise the service which it offers.
The selling of general insurance products
in the United Kingdom is not regulated in
the way that personal investments are, but
firms which underwrite and market gen-
eral insurance products are subject to the
prudential statutory regime enforced by
the Department of Trade and Industry
(DTI).
This regime is designed principally
to ensure solvency and sound manage-
ment. The relevant statutes do not men-
tion the consumer but have the consumer
in mind. However, in a recent article
Jonathan Spencer (Director, Insurance,
DTI) wrote:
'First, the best guarantor of policyholder
protection at least in a prudential sense
is in fact a healthy and successful
industry. Second, the underlying
technique employed by any financial
regulator is that of risk assessment and
risk management. The visible artefacts
of regulation (eg financial returns) are
merely a means to this wider end'.1
Journal of Financial Regulation
and Compliance, Vol. 5, No. 2,
1997.
pp. 139-145
© Henry Stewart Publications,
1358-1988
Page 139
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