FSA forces change on online PPI sales

The Financial Services Authority (FSA) has announced that customers are to receive protection over how they are sold payment protection insurance (PPI) over the internet.

Some online insurance providers were adjudged to have been railroading customers into taking out PPI along with their loan purchase, using techniques such as a pre-ticked box committing them to the cover at point of purchase.

While PPI might prove a safety net against consumer debt, the FSA’s concern was with customers’ being offered an optional service, which costs extra money, as the ‘default’ choice.

Vernon Everitt, a director at the FSA, said: “Naturally, many customers are focussed on getting the loan itself, but it is just as important that they also think about whether or not they want to protect their loan repayments by taking out PPI cover.

“This change means that it will be up to the customer to actively choose to buy PPI rather than it being sold automatically.”

PPI provides insurance for customers taking out credit cards, loans and mortgages, which covers monthly payments should the customer be unable to work at one point of the repayment schedule.

Tags: Loans, payment, director, repayment schedule, internet