Recent proposals by the CC (Competition Commission) may force a ban on lenders pushing the controversial PPI (Payment Protection Insurance) on customers.
Such insurance is often bundled with financial products like loans and credit cards to protect consumers should they fall into a situation in which they are unable to meet the required repayments. Roughly 6.5 million of these polices are sold every year, generating billions in profits for lenders.
The problem lies in the fact that many of these policies are miss-sold and a great number of those with them will never even be able to claim off them because of the complex terms and conditions that guarantee a payout. In fact the Citizens Advice Bureau found that a staggering 85% of its clients had been denied a payout.
Lenders and the Association of British Insures have lashed back with statements that banning PPI altogether could "destroy the PPI market". Moreover there are customers that do or could rely on PPI whom would miss out if such a move went ahead.
Another issue that is been highlighted is that with the increasing number of job losses and considerable amount of turmoil that today's markets are in that PPI may be the only way to ensure borrowers are able to keep up with repayments.
The CC is justified in its claims that the cost of PPI is more than what it should be; this is down to the lack of market competition. It's also pointed out that many consumers are under the impression that they are only able to obtain PPI from the company offering the line of credit, this however is not true.
In fact, in some cases obtaining PPI from an independent insurer could save you hundreds in premiums. If you feel as though you are paying too much for your current PPI plan then you are also fully within your rights to switch insurance providers.
This process can prove tricky though, as a lot off the PPI taken out on
unsecured loans are tied in with the
loans repayment plan. If you feel as though you are paying over the odds for your
personal loans PPI then it's best to speak with an IFA (Independent Financial Advisor) who should be able to point you in the right direction.
