Anger as payment protection insurance costs soar 40%
THE MAIL ON SUNDAY - 24TH JUNE 2007
The price of payment protection insurance being sold by banks and other lenders is soaring despite widespread criticism of the cover.
Payment protection insurance is taken out alongside loans and credit cards to provide borrowers with an income if they are unable to work due to sickness or unemployment. But cover can be hugely expensive and cases of mis-selling are rife.
High Street banks, in particular, have been accused of profiteering from the deals.
Research by data provider Moneyfacts shows that insurer Direct Line has increased the cost of payment protection insurance on its personal loans by more than 40 per cent.
Someone taking out a loan of £5,000 over three years would now pay £24.50 a month for payment protection insurance, up from £14.12 this time last year. This would add nearly £400 to the overall loan.
Lloyds TSB has raised the cost of its payment protection insurance from £21.12 a month to £28.77, Alliance & Leicester has increased rates from £21.13 to £27.39, while Liverpool Victoria's cover now costs £26.30, up from £20.43 a month in June 2006.
In contrast, standalone provider Britishinsurance.com offers payment protection insurance from as little as £4 covering repayments of £150 a month. Paymentcare.co.uk's payment protection insurance policy costs from £6, while the Post Office's Lifestyle Protection policy is £6.75.
Michelle Slade of Moneyfacts says: 'Payment protection insurance is already under investigation by the Office of Fair Trading for its pricing and these increases are just rubbing salt into the wound.'
