• Doing business with the FSA
  • Small Firms
    • Motor retailers
      • Meeting FSA standards
        • Payment protection insurance
          • Enforcement action
          • PPI - internet sales

1. Being clear about what it covers
2. Being clear about the cost
3. Being clear that buying it is optional.

If you sell your customers finance to pay for their car then you may be offering them payment protection insurance as well. It is important that your firm is as professional when selling insurance products like this as it is when it does its main job of selling vehicles.

What is PPI

PPI can protect the customer by covering their credit payments if they become sick or lose their job. But it may not be suitable for everyone, and customers can sometimes find their policy does not cover them when they thought it would.

Frequently asked questions on PPI

Think about how your firm sells PPI

Customers have a clear idea of what sort of vehicle they want, but they still need your expert advice and guidance. They are less certain when it comes to financial products like insurance. That's why it is important that your firm gives them the information they need.

We have found some motor retailers' selling practices make it difficult for those who buy PPI to be able to make an informed choice about why they are buying it, what it will cover and what it will cost.

Three steps to clearer and fairer sales

We think there are three key things motor retailers can do to make sure they treat their customers fairly when they sell them PPI.

1. Being clear about what the product covers

There is no point in the customer buying a product they are not eligible for in the first place - the product will not pay out when they make a claim. So the customer needs to understand if the insurance will cover their circumstances and what exclusions there are in the policy. This helps them to see if they are eligible for it.

2. Being clear about the cost

There's usually more than one way for the customer to pay for their PPI, but we have found some firms push customers towards buying a single premium policy. This is often added to the loan, so the customer is charged interest on the premium as well as the loan. A regular monthly premium is usually a cheaper option for the customer.

If you make it clear to the customer the different costs for the different ways of paying their premium it is easier for them to understand what they are paying for and make an informed choice.

3. Being clear that buying it is optional

Sometimes customers can feel pressured into buying products that are not suitable for them. An example of this is when customers are told they have to buy PPI to secure their credit agreement. You should not insist the customer takes PPI to cover the loan.