Couple 'paid PPI totalling half of loan'

29/09/2008

The potentially poor value offered by Payment Protection Insurance (PPI) has been starkly brought home by consumer group Which?

According to a case study cited by the organisation, one couple in the UK paid £22,568 for the cover - despite the loan it was insuring coming to just £56,000.

PPI is sold by providers alongside loans - and is designed to protect the policyholder against sudden life changes which impede their ability to meet their repayments.

The insurance has been previously criticised by watchdogs for its unjustifiably high premiums compared to what it can repay through being claimed on - and providers have been slammed for selling PPI as part of the loan rather than an optional extra.

City regulator the Financial Services Authority has also taken enforcement action against 13 firms for mis-selling of this kind.

Which? personal finance campaigns manager, Doug Taylor, said: "The fact that firms are still being fined for PPI failings shows that the problem won't go away on its own and PPI's relatively low profile means the number of complaints doesn't necessarily reflect the number of mis-sold policies."

He added: "The FSA must do more to deter firms from mis-selling in the first place, ensuring that all victims of mis-selling are automatically compensated with a fair and robust system."

Tags; Debt Management and Banking, Credit Card Lifestyle,

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