FSA Takes A Stand Over Hard Sell PPI Products
A huge number of consumers in the UK take out some form of loan or credit, and for many of these people protecting their repayments is of the utmost importance. However, it seems that many do not know enough about the options available when it comes to payment protection insurance (PPI), with a large number of consumers assuming that they have to take out this cover with the lender through which they are taking the loan, and many others not realising that they can take out the loan without having to take out any form of payment protection insurance.
Over recent weeks MPs have expressed their concerns over the sale of PPI products to the FSA, and several weeks ago the chairman of the FSA, Sir Callum McCarthy, and the Chief Executive of the FSA, John Tiner, attended a Treasury select committee meeting, where it was agreed that the sale of these PPI policies were not always in the best interest of the consumers. The Office of Fair Trading has expressed concern that these policies often means that the consumer gets a raw deal when it comes to their borrowing.
One MP, Angela Eagle, was concerned that borrowers were being advised to take out insurance products that were expensive or in some cases unnecessary, simply because those selling the insurance were on some form of commission. She added: 'Doesn't it come back to the business model, where there's a lot of hidden stuff going on and people who are selling these very dodgy products are actually on huge commissions and they're basically ripping off customers?'
The chairman of the FSA indicated that PPI was a valuable product that could offer peace of mind to consumers, but that consumers needed to be more informed and better treated by companies selling this type of cover. He said: 'It is a product which meets a real need and the challenge for us is to make sure people treat their customers better and there are lots of examples of people not doing that and that is why we are taking action against a number of firms.'
24th November 2006
If you have payment protection on any personal loans that you may have made, did you know that you could be paying upwards of £2000 on top of the original debt including the interest?
If you're taking out a sizeable loan, the idea of payment protection may sound like a good idea. Programs such as these protect buyers in the event that they are unable to make payments on the loan due to events such as layoffs or medical emergencies.