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Report: Loan providers often include PPI in quote

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by Elaine Frei
Report: Loan providers often include PPI in quote

Consumer group Which? has charged that some loan customers could be tricked, inadvertently or not, into buying payment protection insurance (PPI) when they take out a loan. Mystery shoppers for the consumer organization found that in 24 cases out of 41 requests for quotes from loan providers, the price of PPI was included in the quote. The payment protection policies are intended to help pay off loans, mortgages, or credit card balances if the holder of the obligation becomes ill or unemployed. While the practice of including the price of PPI in the quote does not break any laws or protocols, Which? worries that doing so could make some potential customers to believe that buying PPI along with the loan is a requirement of being granted the loan. This, the group fears, will lead many to buy PPI even when it is not appropriate for them.

The Competition Commission is currently looking into allegations that PPI is too expensive and that it is often mis-sold. The investigation came after the Office of Fair Trading found that even though PPI could be a good buy for some customers in some situations, consumers often do not shop around for the best deal on PPI, that in any case it is difficult to compare prices on various PPI policies, and that in some cases customers were told outright or led to believe that purchasing PPI would increase the chances that they would be granted a loan.

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News posted: May 2, 2007

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