Paymentcare, the specialist payment protection provider, has called for a switch to a US-style payment protection insurance sales system that helps protect vulnerable borrowers from astronomical policy changes.
Under the American system, banks are not allowed to push PPI/ASU cover to borrowers signing a loan agreement.
Paymentcare also called on the government to introduce a clause in the forthcoming revision of the Consumer Credit Act to further protect borrowers.
Shane Craig, managing director of Paymentcare, says: “Outlawing the selling of PPI at the point of sale as they do in the States will greatly reduce the currently unacceptably high incidence of mis-selling of expensive and often useless cover.”
“The perfect opportunity to make it illegal is to amend the Act: we also want to see lenders being forced to put a disclaimer on their loan products, making it clear that payment protection insurance is not compulsory for borrowers.”
In the week that Citizens Advice appealed to the Office of Fair Trading to launch a probe into the multi-billion pound payment protection insurance industry, Paymentcare also called on the total banning of single premium policies.
Craig says: “Its no longer a question of profits, its sheer greed thats driving banks and lenders to sell single premium cover where a lump sum is added to customers loans, rather than offering monthly paid policies, which the customer can cancel at any time if they feel they no longer need the cover. It adds insult to injury that they then charge interest on these upfront payments.”