Paymentcare.co.uk has slammed single premium payment protection insurance policies as “not in the customer’s best interest”.
It says stand-alone PPI policies offer customers a credible alternative to expensive lenders own offerings and provide much better value for money.
Shane Craig, managing director of Paymentcare.co.uk, says: “With the Financial Services Authority due to publish a consultation paper this month setting out proposed rule changes to the way PPI is sold, it is highly likely that the soaring secured loans industry will need to address the issue in order to satisfy the Insurance Conduct of Business recommendations.”
“PPI is an integral part of the secured loans process and it’s essential that intermediaries are aware of the policies available to them. This will help to ensure that they treat their customers fairly.”
“Since the launch of the Office of Fair Trading’s investigation of the whole of the PPI market in September 2005, it has become abundantly clear that single premium loan PPI policies are not in the customer’s best interest.”
“The cost of these policies is added to the loan and the whole amount then gathers interest, making the PPI exceedingly more expensive than necessary.
“A monthly paid policy from an independent provider offers far better value for money and can be cancelled at any time ensuring that customers only pay for the cover they actually need.”
“Intermediaries must be clear on what it covers, what it costs and the fact that it is entirely optional.
“Because PPI is a secondary purchase and therefore not the customer’s primary focus, it is often the case that they sign up for policies that they do not fully understand.
“By offering an independent option brokers can ensure their customers are buying PPI with their eyes wide open.”
“Offering customers a stand-alone monthly paid policy will benefit both brokers and customers alike and will help to further strengthen the appeal of secured loans as a viable means of borrowing.”