The crackdown on loans insurance is set to be stepped up, according to the regulator.
The City regulator has promised to crack down harder on Payment Protection Insurance (PPI).
In an update of its ongoing review of the sector, the Financial Services Authority (FSA) said that it would be "escalating" its interventions. PPI providers have previously been accused by consumers and consumer groups for selling the insurance as "default" alongside loans, rather than as an optional add-on.
PPI works by helping policyholders make their loan repayments if they suffer a sudden life change, such as job loss. However, some analysts have said that the cover is often insufficient and that the premiums are too high.
One case reported on by Which? last week even showed that a UK couple had paid around £23,000 in PPI on a £56,000 loan. The FSA itself has censured 13 different firms for PPI mis-selling, with fines levied of up to £1 million.
Jon Pain, managing director of the FSA's Retail Markets, said: "Tackling poor PPI sales practices remains a high priority for the FSA.
"We will intervene to ensure consumers are protected and are considering what regulatory powers are the most appropriate to deliver fair outcomes. Firms may wish to consider stopping selling single premium PPI sold alongside unsecured personal loans, given the continuing problems in the sales of this product."
In its statement, the FSA also said that it will publish an update on its PPI review in the New Year.
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