Reforms can fix 'broken' PPI market, says watchdog

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The Financial Services Authority said its measures, including new handbook to ensure complaints are handled properly, will "protect consumers" from PPI products, which are designed to cover loan repayments in the event of unemployment or loss of income.

It believes the measures - which come into force on December 1 - can "mend a market that has been broken for too long".

The FSA has so far taken action against 24 firms and handed out nearly £13 million in fines for PPI failings.

Today the Financial Ombudsman Service said more than 21,400 complaints had been lodged over PPI since April - including nearly 2,000 last week.

It has received a total of 114,478 consumer complaints in the past five years over PPI. Over half of these have been received in the past 16 months, with numbers reaching record levels each week.

PPI covers debt repayments if the holder is ill or loses their job, often sold alongside personal loans, credit cards and mortgages.

But bad sales practice in the sector and the cost of premiums have seen PPI become the single most complained about product to the FOS.