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One thing I’ve always found interesting is how the press reports things. As an example, take the recent knife amnesty. More or less as soon as it was announced the Press Association started to report individual stabbings and all of a sudden the general public were whipped into a belief that there was a growing knife culture. In reality the number of stabbings hadn’t materially increased since the beginning of accurate records began.

I recall this because in some ways a similar sort of ’selective reporting’ has happened again today.

Let me explain. In 2005 a task force was formed by CWC and Le Bea Visage to increase the sales of income protection. Members of the task force include Prudential, Bupa, Friends Provident and Legal and General and the idea behind the movement is to counteract the falling sales of Income Protection.

As opposed to individual protection for each product bought, like taking out Mortgage Payment Protection Insurance (MPPI) against a home loan, income protection covers the total loss of all income. Up until quite recently income protection was called Permanent Health Insurance (PHI).

Today the taskforce produced a 40 page white paper outlining its views on why people weren’t buying Income Protection, why they should and laid down a nine point recovery plan of how it was going to instigate a market recovery. In the same document the task force also openly criticised the sale and profiteering of payment protection insurance.

The thing that I find interesting is that, as Payment Protection Insurance (PPI) is hot news, the newspapers (or the on-line versions at least) hardly mention the substance of the white paper and just report the PPI elements of it. For example the Guardian tells us “Taskforce demands consumer protection over PPI” and the Daily Mail says, “Task force slams PPI sales tactics”.

To quote the old adage any press coverage is good press coverage, so maybe the task force will be content, but perhaps we should remember our hunger for sensationalism will always override the fact that 95% of real news really is actually quite boring.

Perhaps due to a slump in sales or maybe because of customers showing concern, the Building Societies Association has issued a letter to the Office of Fair Trading (OFT) about MPPI (Mortgage Protection Payment Insurance).

This comes in light of the OFT referring PPI, including MPPI, to the Competition Commission after finding very worrying failings in the way it is sold.

The letter states “We believe that the MPPI sector is fundamentally different to the general PPI sector. This is both in terms of how the product is sold and also customers experience of the product if they have to make a claim. You identified many of these differences in your investigation into the PPI sector and we trust that the CC will, if it goes ahead with an investigation, also identify these differences.

“We note that you found that MPPI products are of better quality than general PPI products. We also note that you found the market to be more competitive than the general PPI market and that better sales techniques are used. As the market matures, we expect both existing providers and new entrants to continue making improvements to both the products themselves and also the ways that they are sold. These innovations will further benefit consumers.

“One weakness of the paper is that it fails to highlight the wide choice of different MPPI products. Although you acknowledge that MPPI can be purchased on a modular basis, you fail to recognise the differences between various MPPI products – while some policies, for example, provide just a very basic level of cover, others provide a whole range of ancillary benefits to claimants such as assistance with finding new employment. This increases not just the range of products available, but also the price of products available to consumers.”

I think in some ways it goes to show that some things prove profitable for companies and then the less scrupulous come along and exploit the market more and more.

The PPI and MPPI story is going to run and run……

Loans.co.uk, one of the big players in the Secured Loans market, has been fined by the Financial Services Authority (FSA) for its dealings with PPI.

Following on from stories last week about the OFT referring PPI to the Competition Commission the FSA has demonstrated the Government means business by fining Loans.co.uk a whopping £450,000. The FSA has said that Loans is one of ten companies it is investigating - so, in all probability - there are likely to be more fines imposed in the coming months.

The FSA said Loans.co.uk failed to treat its customers fairly when selling PPI. The company did not have appropriate systems and controls to minimise the risk of unsuitable sales. The FSA investigation found that the firm failed to gather and record information to show that the policy recommendations it made were suitable and discovered that customers did not receive enough information at the point of recommendation to make an informed decision about the PPI policy being offered.

Margaret Cole, FSA Director of Enforcement, said: “We have highlighted payment protection insurance as an FSA priority due to the potential level of risk to consumers. Loans.co.uk Limited failed to make sure adequate processes were in place to ensure the suitability of its PPI recommendations and treat its customers fairly. We encourage consumers to ask straightforward questions of sales staff when PPI is mentioned to help them to identify whether the product is right for them.”

The PPI debacle is a story that’s obviously going to hang around for at least the next 12 months and there’s obviously going to be a knock on affect for the secured loans industry.