Big banks pull single premium insurance
Alliance & Leicester, Barclays, The Co-Operative Bank, Lloyds Banking Group (including Lloyds TSB, Halifax, and Bank of Scotland), and RBS/Natwest are to stopped selling single premium Payment Protection Insurance (PPI) with unsecured personal loans by the end of January 2009.Some of these banks now offer or plan to offer regular premium PPI instead of a single premium product.
Jon Pain managing director of retail markets and regulator the Financial Services Authority (FSA) welcomed the move, saying:
“We are pleased these firms have stopped selling single premium policies and would expect other firms to notice these developments and review their own positions. A PPI product can be helpful for customers wanting protection on a specific credit agreement, as long as the policy is sold appropriately.”
The FSA has been concerned for some time that insurance covering the repayment of personal loans may have been poorly sold, particularly where the borrower pays a single, upfront amount for the policy. A Citizens Advice debt policy officer said:
“We welcome the move by the major high street banks* to stop selling single premium payment protection insurance (PPI) with unsecured personal loans …these premiums are very expensive and can add substantially to the cost of a loan, often increasing people’s debts instead of protecting them against hard times.
“However we still have concerns about the high price and poor quality of many PPI products, and there is still a long way to go in tackling these problems. Things haven’t moved as quickly as we would have liked on this front. Given where we are with the recession, it’s vitally important that people have access to the reasonably priced, effective, good value policies they really need.”