The Financial Services Authority (FSA) has told all firms still selling single premium payment protection insurance (PPI) with unsecured personal loans to withdraw such products by 29 May. The move comes after an inquiry by the Competition Commission recommended the sale of single premium PPI be prohibited after 1 October 2010. A number of major banks have already decided to stop selling the product, with some firm's opting to offer regular premium PPI instead.

"We believe that PPI can play an important and legitimate role to cover repayments on specific credit agreements for consumers facing job loss, or other issues at this difficult time," wrote Jon Pain, the FSA's managing director of retail markets, in a letter to firm's chief executives. "However, our focus remains on how this product has been, and continues to be, sold and whether consumers have been treated fairly during the sales process."

The deputy chairman of the Financial Services Authority and former chief executive of HBOS, Sir James Crosby, has announced his resignation. His departure follows evidence unveiled as part of Tuesday's Treasury Select Committee session into the banking crisis. During the inquiry it emerged that Paul Moore, former head of group regulatory risk at HBOS, tried to alert Crosby to the fact that HBOS was growing too fast too quickly, back in 2004. However Sir James, who was at the helm of HBOS from 2001 to 2006, claimed there was no substance to the allegations.

"I nonetheless feel that the right course of action for the FSA is for me to resign from the FSA board, which I do with immediate effect," he added. The FSA said: "The specific allegations made by Paul Moore in December 2004 regarding the regulatory risk function at HBOS were fully investigated by KPMG and the FSA, which concluded that the changes made by HBOS were appropriate."

The Financial Services Authority (FSA), has warned the UK's recession may be longer and deeper than expected anticipated. It believes that ongoing issues in the financial sector, in particular the lack of credit available, are jeopardising chances of economic recovery. The FSA stated that risks to the UK economy were weighted to the downside and, while the effects of the fiscal stimulus and monetary easing remained unclear, the recession might be deeper and more prolonged than expected. The comments were contained in the FSA's Financial Risk Outlook which was published yesterday. The report also claimed there was a danger of the economy slipping into a "self-reinforcing deflationary cycle," where a lack of lending forces house prices, consumer spending and business profits down, and unemployment and defaults up. It added that businesses and consumers must plan for a "greater degree of uncertainty than normal".