Lloyds Banking Group’s withdrawal from the sale of payment protection insurance suggests it will not be able to generate adequate profits from the product if the Competition Commission insists on a point-of-sale ban, as is widely expected.
In making this move Lloyds group joins lenders such as HSBC and the Royal Bank of Scotland, which have recently pulled back from offering PPI to customers.
So now that Lloyds TSB, Halifax, Bank of Scotland, Cheltenham & Gloucester and Black Horse have joined the list of companies that will not automatically offer cover to customers taking out personal loans, credit cards and mortgages, brokers have a big opportunity to fill the protection gap.
And this opportunity could hardly come at a better time because insurers are bringing to market a range of products that are tailored to the demands of the 21st century.
This is important because demand for PPI products and mortgage protection is set to rocket as the country continues to navigate the rocky waters of economic instability.
With Treasury predictions of 600,000 public sector job losses and an additional 700,000 redundancies in the private sector intermediaries owe a duty of care to their customers to highlight the benefits of having adequate protection in place.
Innovative products such as those currently being introduced mean that cover doesn’t even have to be tied to the mortgage any more.