Banks to stop selling single premium PPI
Several High Street banks are to cease selling single premium payment protection insurance (PPI) with their unsecured personal loans.
Alliance & Leicester, Barclays, Co-Operative Bank, Lloyds Banking Group and RBS/Natwest will be opting out of the controversial market for single premium PPI by the end of this month.
The Financial Services Authority (FSA) has welcomed the move, adding that some firms, along with other market players, now offer or plan to offer regular premium PPI, instead of a single premium product.
The regulator also says it expects firms still selling single premium PPI to take note of these developments.
In November, the Competition Commission proposed a ban on the sale of PPI within 14 days of the sale of an associated loan or credit card facility.
The Commission has been investigating the sale of the insurance amid claims by consumer groups that it is often expensive and has been habitually mis-sold.
In addition, providers have commonly boosted their profits by incorporating the cost of a one-off PPI premium into a loan, so that the customer pays interest on the premium.
According to consumer group Which?, similar cover from a PPI provider offering a monthly premium can provide big savings for borrowers.
It should also be noted that PPI is most effective if it is based on a customer’s entire financial circumstances, rather than one particular loan or credit card facility.