The end for lump sum loan insurance

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  • di3004
    di3004 Posts: 42,579 Forumite
    Some news here to:

    http://money.aol.co.uk/loan-insurance-to-be-removed/article/2009052904365293247972

    Loan Insurance to be removed.


    http://money.aol.co.uk/loan-insurance-t ... 5293247972

    Banks and other lenders are due to stop selling controversial single premium payment protection insurance alongside loans.

    City watchdog the Financial Services Authority has called on companies to withdraw the product from sale from Friday at the latest.

    The move follows a damning report into the Payment Protection Insurance (PPI) market by the Competition Commission earlier this year, in which it said it would be banning the sale of single premium PPI from October 2010.

    But in February, the FSA said it had decided to call on all firms to stop selling the product ahead of this deadline due to "ongoing concerns" over the standard of sales.

    The FSA's managing director of retail markets Jon Pain wrote to chief executives asking them to stop selling single premium PPI with unsecured personal loans as soon as possible and by May 29 at the latest.

    PPI covers debt repayments if the holder is unable to work due to an accident or illness or if they lose their job.

    But unlike regular premium policies, in which premiums are typically paid on a monthly basis, under single premium cover the entire cost of the policy is paid upfront, often being added to the debt that is being taken out.

    This practice leads to people paying considerably more interest on their debt, while in some cases consumers claimed the premiums were added to their loan without them even knowing about it.

    An FSA spokesman said: "No firms will be selling single premium PPI on unsecured personal loans from today following FSA intervention and action with the industry."

    A number of major banks had already decided to stop selling single premium cover ahead of the Commission's report, instead offering the regular premium version of the insurance.
    The one and only "Dizzy Di" :D
  • di3004
    di3004 Posts: 42,579 Forumite
    Costs may rise on single-premium PPI ban

    http://www.thisismoney.co.uk/credit-and ... age_id=506

    Costs may rise on single-premium PPI ban: (link above)

    Consumer groups have welcomed the ban on the sale of single-premium payment protection insurance policies that came into force last Friday.


    But there are fears that the cost of cover could increase as lenders look to claw back lost revenues.
    Experts advise borrowers who want PPI to shop around for the best stand-alone cover rather than taking their lender's offer.

    PPI, which is supposed to safeguard loan repayments if the borrower loses their job or is unable to work due to illness, has been controversial because it is expensive and buyers are often ineligible to claim.

    Single-premium policies have been the subject of even stronger criticism because the cost of cover is rolled up into the loan, with borrowers paying interest on it.

    Anyone who wants PPI cover will now pay for it monthly, which means it should be easier to cancel.

    Vera Cottrell, personal finance campaigner at Which?, says: 'The ban on single-premium PPI is good news and long overdue.

    'Borrowers should remember that they don't have to take PPI with their loan provider and they can buy a stand-alone policy elsewhere, which may be cheaper.'

    Further restrictions on the sale of PPI will come into force from October next year.

    These will see a ban on the sale of cover at the same time as a loan, with providers forced to wait at least seven days before approaching the borrower to see if they want the insurance.

    Barclays and Lloyds TSB are fighting this 'point of sale' ban in the courts.
    The one and only "Dizzy Di" :D
  • melorablack
    melorablack Posts: 1,114 Forumite
    di3004 wrote: »
    Barclays and Lloyds TSB are fighting this 'point of sale' ban in the courts.

    :rotfl:haha! Really Barclays and Lloyds, just accept it and move on....funny because HBOS have not sold single premium policies and have accepted the point of sale ban since around February....I wonder what will happen when Lloyds and HBOS merge their PPI sales processes???? :rolleyes:
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