Payment Protection Insurance

ArchieB_2

I also follow the line that PPI is not inherrently bad. The way it is sold and more specifically charged for alongside a loan for instance is scandalous. Until people understand what a non advised sale is and a more transparent process is insited upon by the FSA then you will have mis selling examples (and I am sorry, but selling ASU cover to somebody who cannot claim on the U element and not bringing this to their attention is mis selling).

Credit card protection is the biggest rip off when you consider the cost per £100 of benefit. Regular premium MPPI products are generally OK and most consumers know they can shop around from independent retailers.

Policies are not particulrly complex and I would agree are as transparent as Home Insurance (plus a lot shorter to read!). Having said all that I would never purchase Loan PPI, Credit Card PPI and would only consider Mortgage PPI as a vehicle to reduce the cost of my PHI cover.

Astaroth

ArchieB wrote:

Credit card protection is the biggest rip off when you consider the cost per £100 of benefit.

As policies are not rated on personal circumstances I feel that the premiums are much to high for me.... I dont have a mortgage and have sufficient savings to pay off all the debts that I have (all currently on 0% interest), have PHI, life insurance, accident insurance etc etc

My only experience of CC protection has therefore been when my partner used to handle PPI claims and whilst the "value for money" is potentially questionable depending where you are in the rating lines certainly the policies didnt stop the customer continuing to spend on the card... so if there was no max claim duration (which some didnt :eek: ) you could continue spending "forever" and they would continue to pay off the balance.

ArchieB_2

They continue to pay off the miminum repayment or a set % of the balance and only the balance if you die. The benefit vs cost is hiddeous.

I think only some of the St Andrews underwritten products don't limit the AS benefit term (but all limit the Unemployment benefit term). I myself am not mortgage free so you will understand any future hostile posts to yourself Astaroth;)

Astaroth

With the ones that the misses used to deal with (not St Andrews) they paid, if memory served me correct, 10% of the balance each month and freeze the interest. If you had a card with a balance of £10,000 you could effectively continue to spend £1000 a month and the balance wouldnt move - possible problem if you have a max 12 month policy and anticipate being off longer but if you are only signed off sick for a couple of months or had an unlimited policy then it quickly went against the insurers favour.

nemo183

Astaroth wrote:

Personally.... wouldnt touch PPI with a barge pole.....

..... Most policies I have seen, and certainly all of ours ......

Thanks for the interesting post. On the whole, I'd suggest that we are probably in broad agreement - other than your view point of being from a provider of PPI, and mine more as a consumer.

I completely agree that the concept of PPI is valid - I just don't think it represents value for money, most of the time.

It will be interesting to see the outcome of the super complaint, and how that changes things.

nemo183

Tootsie_Roll wrote:

I have heard this a lot just never experienced it after working nearly 20 years in retail banking.

I read your post with interest. Although I respect that with 20 years experience of the subject, you understand it well, it might be argued that over this period of time this very familiarity has stopped you from taking a more objective view.

Just as an example, I recently redeemed my mortgage, and amongst other fees I was charged £140.00 for "Calculating the redemption figure, producing a statement and processing the funds". I appreciate that this process costs money, and I should pay for it. Taking these tasks in turn:

1) Cost of automatic calculation of redemption figure - virtually zero.
2) Printing and posting the statement - say £10.00
3) Processing funds (i.e. banking my cheque) - say £5.00
4) Allowance for manual work - say 30 mins at £30/hour - £15.00

So, cost to lender around £30, and charge to me £140.00. Even the most even handed of customers might be forced to think that perhaps this is merely a chance to screw the customer for £110, one last time.

However, the lender's agent was so blind to the actual costs involved, and so committed to the policy of charging £140, they were unable to even attempt to justify the charge.

Finally, this charge was hiked to this level well after the original loan was made.

Astaroth

nemo183 wrote:

I completely agree that the concept of PPI is valid - I just don't think it represents value for money, most of the time.

As with most insurance, it represents very good value for money when you make a claim and feels like a waste when you get to the end of the policy and havent made a claim.

I think it would be interesting to see a PPI product that was actually a risk rated product rather than the flat rate that is currently used. [STRIKE]Un[/STRIKE]fortunately the brand within our Group that I work for doesnt write PPI and therefore I cant really investigate such an offering properly.

Tootsie_Roll

nemo183 wrote:

I read your post with interest. Although I respect that with 20 years experience of the subject, you understand it well, it might be argued that over this period of time this very familiarity has stopped you from taking a more objective view.

Just as an example, I recently redeemed my mortgage, and amongst other fees I was charged £140.00 for "Calculating the redemption figure, producing a statement and processing the funds". I appreciate that this process costs money, and I should pay for it. Taking these tasks in turn:

1) Cost of automatic calculation of redemption figure - virtually zero.
2) Printing and posting the statement - say £10.00
3) Processing funds (i.e. banking my cheque) - say £5.00
4) Allowance for manual work - say 30 mins at £30/hour - £15.00

So, cost to lender around £30, and charge to me £140.00. Even the most even handed of customers might be forced to think that perhaps this is merely a chance to screw the customer for £110, one last time.

However, the lender's agent was so blind to the actual costs involved, and so committed to the policy of charging £140, they were unable to even attempt to justify the charge.

Finally, this charge was hiked to this level well after the original loan was made.

A very simplistic view. You enter the cost of calculating the figure at zero !! What about the costs involved for manning that department, realeasing deeds etc etc etc. In addition to these you were ending a contract early seems only reasonable that you pay some penalty.

Astaroth

Add to that all the counter fraud and anti-money laundering checks that have to be done for large sums of money (ie your phase 3). Given we legally have to do these it is amazing how much the providers of the databases are allowed to charge per connect/ licence to the database

mrcow

nemo183 wrote:

I think I see your point, but what I object to is all the monthly loan insurance amounts being bundled up into one charge, and then being added to the loan, so that you are charged interest on the total bundled monthly insurance, for the duration of the period of the loan, from the start of the loan.

Absolutely.

Many people don't realise that they are paying interest on their PPI premium, and that they have been charged in one lump sum for the entire period (eg. ten years in one go). Lenders don't go out of the way to explain exactly what's being paid and how it's being charged as they make so much money out of it. No matter your opinion, you can't deny that it fools a lot of customers (you only have to take a sweep of the loans board to see that!).

So what a customer thinks is costing them £30 per month for ten years (in your example) is actually costing £43 per month (at an example APR of 8%). It's misleading to many.

Interesting about the mortgage redemption figure. Are you implying that it is fair for a company to impose a highly inflated penalty charge (that the lender is "able" to increase at any point during the ongoing agreement) on a customer for terminating a contract?