Which? has welcomed a move by some of the major high-street banks to stop selling single premium Payment Protection Insurance (PPI) with unsecured personal loans.
Alliance & Leicester, (which was fined £7m by the Financial Services Authority in 2008 for serious failings in its telephone PPI sales,) Barclays, The Co-Operative Bank, Lloyds Banking Group (including Lloyds TSB, Halifax, and Bank of Scotland,) and RBS/Natwest will stop the sale of the controversial product by the end of January 2009.
Some of these firms, along with other market players, now offer or plan to offer regular premium instead of a single premium product.
Louise Hanson, head of campaigns at Which?, said: ‘These firms have recognised that the party is over for single premium PPI and the rest should follow suit.
‘It is a fundamentally bad product and should be withdrawn from the market altogether.’
Get money back
Which? has been for many years and urges anyone who has PPI to check if it’s a single premium policy as they could claim their money back.
The FSA has also welcomed the move but recognises the importance of appropriate protection insurance in the current economic climate.
However it says it’s still concerned over the standard of sales of single premium PPI.
Concerns over PPI sales
Customers being sold this type of product should be told how the product works, what it covers and how much it costs – especially as the cost of the PPI is added to the loan and interest charged on this amount.
Jon Pain, the FSA’s managing director of retail markets, said: ‘We are pleased these firms have stopped selling single premium policies and would expect other firms to notice these developments and review their own positions.
‘A PPI product can be helpful for customers wanting protection on a specific credit agreement, as long as the policy is sold appropriately.’
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