Victory over bank sales of PPI

Over recent years there has been a lot of controversy over single premium payment protection insurance cover. Whilst much of the concern has been related to the way that this type of insurance cover has been mis-sold by many lenders and providers, there has also been a lot of concern relating to the cost of single premium PPI.

This is because it is paid out as a lump sum and the cost of the cover is added to the money that the consumer is borrowing, resulting in them having to pay interest on the cost of the insurance as well as on their loan.

Single premium PPI will now no longer be sold alongside unsecured personal loans by a number of banks, and those that have decided not to sell this cover with their loans any longer include the Co-operative Bank, Barclay’s, RBS and Natwest, Lloyds TSB and HBOS, and the Alliance and Leicester.

The decision by these banks to stop selling this type of cover has been seen as a victory by campaigners that have been trying to get consumers fairer deals on PPI.

The banks in question will still be offering consumers the chance to take out regular premium PPI with their loans if they wish to do so, and this will be a monthly fee in exchange for protected repayments for a fixed period in the event that the borrower cannot make repayments on the debt due to sickness, injury, or redundancy.

One industry official said that some people may still find that PPI is a useful type of insurance cover to have, and could offer peace of mind particularly in the current uncertain financial climate. He said: ‘A PPI product can be helpful for customers wanting protection on a specific credit agreement, as long as the policy is sold appropriately.’

Tags: ppi, Lloyds Banking Group, alliance, PPI victory, PPI product, payment protection insurance, Types of insurance, useful type