Firms who sell Payment Protection Insurance to customers who are not in need of it face a crackdown from the industry watchdog.

The Financial Services Authority has introduced new rules to police the much criticised products, which are intended to protect people who are injured or become unemployed and are unable to service their credit card debts.

From now on, companies will have to establish that customers will benefit from taking up the plans, and extend the existing cancellation period from 14 to 30 days.

Companies will also have to explain the nature of their product orally, and not subject customers to the intricacies of the small print.

“We have amended the rule to highlight that the information should be enough to enable the customer to take an informed decision,” said an FSA spokesman. “The firm must not overload the customer or obscure other parts of the information.”