14 February, 2009

It has been indicated that over the course of the last few months, you may have on the regular basis read news pieces on the projected changes to Payment Protection Insurance (PPI) following a report from the Competition Commission (CC) and examination conducted by the Office of Fair Trading (OFT) and Financial Services Authority (FSA), because of the excessive complaints which have been received by the organizations from consumers regarding mis-selling of these products.

However, PPI is often sold by banks, building societies and other reputed institutions together with a new personal loan application, all at once as the loan and is intended to look after the monthly repayments in the event of the borrower facing accident, sickness or unemployment.

The CC has anticipated that there should be a waiting period of 14 days between the loan application and sale of the PPI policy and that single premium PPI must be prohibited.

In line with these suggestions, five high street banks have now point out that they are planning to stop selling PPI on a single premium basis in association with unsecured loans to customers from the end of this month. These lenders will only be able to suggest regular premium PPI products together with their personal loan products.

The FSA has praised the banks in question on the move, indicating that it is a major step in the right move towards enhancing the sale of PPI policies and those other loan providers must now pay attention and make similar changes to their product range and sales procedures.

According to Jon Pain of the FSA, “We are delighted these firms have stopped selling single premium policies and would anticipate other firms to pay attention towards such growth and review their own standing.

A PPI product can be of great assistance for customers wishing for a protection on a particular credit agreement, only if the policy is sold suitably. The selling of single premium PPI in association with unsecured loans was turned out to be costly which unable to cope by the customers. As a result stopping could be a good decision.”