The report was compiled after a series of mystery shopping exercises at lenders including Northern Rock, Lloyds TSB, Halifax, Egg and NatWest.Adding PPI to the repayment of a loan can significantly increase the amount paid back and some believe the cover to be expensive. Leigh Calder, spokes- person for Lloyds TSB, says: “We make sure our customers know what they are applying for. We have a policy that all customers have to sign two separate documents regarding PPI – once on the loan application and a separate document solely about PPI. “We also have a 30-day cooling-off period where the customer can cancel their PPI without any extra cost to themselves.” He adds: “With our PPI cover we offer positive job solutions. As well as paying cover when someone is made redundant, we also help to get them back into work by helping with CV writing.” Paymentcare found that when applying for a personal loan of 7,500, each lender involved offered the initial quote inclusive of PPI. The exercise found NatWest charges an additional 42.70 a month on top of the standard monthly repayment, while Egg came in at 37.84. Shane Craig, managing director of Paymentcare, says: “On each occasion the mystery shopping team was left thinking that they would be at a distinct disadvantage if they did not take out the additional insurance – yet there was no attempt made at the point-of-sale to establish whether the cover was appropriate. “The lenders covered in this mystery shop are guilty on two fronts: for giving the first quote with PPI, as it is an inflated figure and not one that the consumer would necessarily want, and for omitting to establish the eligibility of the applicant before doing a hard sell on the loan.” Calder adds: “We at Lloyds TSB believe PPI is important cover, but we give the customer the option to decide whether they need it or not.”
A report by Paymentcare has slammed high street lenders for failing to alert borrowers when personal loan fees include personal protection insurance, and that there is no obligation to take the cover.