If you have taken out PPI (payment protection insurance) for a loan or a mortgage then there is a good chance that you are being charged too highly for this. There is a report that has been compiled by the Compensation Commission and they have deemed that there is not enough competition in this sector, and as a result the banks seem to be making the figures up as they go along. High, obviously.

Consumers when they are offered this (if they are offered it, as opposed to being made to think that it is compulsory) they are not being told that there are other places that the insurance can be purchased from, for a fraction of the price. The banks make it sound as if you have to have it alongside your borrowing, but this is not the case.

The market for PPI is a big one and ranked at around 1.4billion per year. This is a large amount and it comes as no surprise when you realise some of the grossly inflated charges that people are being hit with. A PPI from a broker, that is not linked to your borrowing by the bank that you took your borrowing with, is far cheaper. An independent PPI is going to cost you around 3 pounds for every 100 that you borrow. The PPI that you will be asked to take along with your borrowing is going to cost an average of 28 pounds for every 100 that you borrow, which certainly is an alarming difference

As if just making the policies unbelievably expensive was not enough of a liberty to take, the financial institutions are also selling the policies to people that are unlikely to be able to make a claim using the policy, should they need to. Self employed people, and people that have fallen ill due to their mental health, are often the people that get fobbed off the most. Most of the PPI that banks get people to have are subject to stringent conditions, that should be checked in the small print. Something else that is important is that a lot of PPI is subject to a single premium that gets added onto the cost of the loan repayment, which ,means that interest will be paid on it.

There was absolute uproar when all of this came to light, and as a consequence, the Citizens Advice Bureau were flooded with calls. The offshoot of this is that there was a large complaint referred to the Office of Fair Trading. Around this time, yet another organisation got involved, which goes a long way to highlighting the severity of the situation. The Competition Commission carried out a detailed study of the market. They are still carrying out this study, and it is thought that it will be around Christmas time that they publish the details of their findings along with solutions to the problems. All of the suggestions will aim to make the whole PPI market a far more consumer friendly place. It is thought that they will suggest a temporary ceiling on the amount that can be charged for PPI. Another thing that is probable is that they will make it a must for the providers of PPI, to provide their customers with the knowledge that PPI can be purchased at more competitive prices. It is also likely that companies providing PPI will be made to advertise the actual cost of it, inclusive of interest. All of these measures are positive measures, and should help the consumer.

This article is written by Jonathan L Walker, on behalf of Claims Management
UK, specialising in helping people with their Mis-Sold PPI