PPI sector 'still hasn't improved'

03/06/2009

Regular Payment Protection Insurance (PPI) costs some customers as much as now-banned single premium products.

Research from Which? found that the policies were still offering high-cost protection on personal loans - and pointed out that there remained "bad deals" on the market.

PPI works as a type of insurance cover on credit cards and loans - which helps policyholders with their repayments if they suffer a sudden life change such as job loss.

However, the policies have been criticised for offering poor value for money and for being missold by providers.

Single premium PPI, which sees customers pay a lump sum up front for the insurance and is therefore difficult for customers to switch from if they want to go with another provider, has been the target of particular criticism.

Following lobbying from consumer groups, the Competition Commission and the Financial Services Authority (FSA) have now banned the policies - but the Which? research suggests that this has not necessarily led to across-the-board improvements from providers.

Lucy Widenka, personal finance campaigner at the group, said: "How disappointing that some lenders appear set against offering value-for-money cover. Making regular premium PPI as expensive as single premium PPI makes lenders look as determined to make a certain amount of money from people, whatever they may be selling.

"To avoid a bad deal, consult an independent financial adviser about your overall financial protection needs and shop around before committing to anything."

The Competition Commission's ban on the insurance officially comes into effect in 2010.

However, the FSA has already warned firms to stop selling single-premium PPI from Friday June 6th.

Tags; Debt Management and Banking, Credit Card Lifestyle, Recent Graduate Debt,

• Share
• 
• 
• Store
• 
• Follow
•