Unwanted payment protection insurance being sold
- 5TH MAY 2007
Shocking research from consumer watchdog Which? has shown that more than half of banks and lenders are automatically including the cost of unwanted payment protection insurance (PPI) in quotes for personal loans.
Researchers posed as customers and made 41 applications with different lenders for a personal loan over the telephone and the results were shocking. 24 of the 41 firms who they applied to automatically included loan payment protection insurance in with the cost of the personal loans.
Which? said that some lenders quoted both with and without loan payment protection insurance, with only one lender not including the cover in with the quote.
Internet applications also had the same results. NatWest, Lloyds TSB and Tesco all initially quoted with payment protection insurance included and in order to get a quote without the cover, a borrower has to visit another page.
In the UK there are around 20m payment protection insurance policies active. However, the industry has been blighted by research that has shown that the cover is often over priced as well as sold to customers who would be ineligible to claim. The biggest concern is that so many people are sold payment protection insurance cover without actually being aware that they had it.
The sector has now been referred to the Competition Commission for a full, in depth enquiry following independent investigation by the office of Fair Trading, the Financial Services and super complaint by the Citizens’ advice.
In the meantime, consumers are urged to double check the paperwork when it comes to taking out any form of borrowing, even for loans on white goods. Simon Burgess from standalone payment protection insurance provider British Insurance says: “The way that payment protection insurance is currently sold, there is a risk that consumers could be paying for expensive cover that they do not want.
'Payment protection is not compulsory, so you are free to shop round for cover from independent provider or even not take it all.”
