Banks To Be Banned From Selling Insurance With Loan
Finally it seems as though something is going to be done about the obscene amount of money that is made by selling PPI.
The solution? They will not be able to sell policies alongside loans.
They will alternatively, have to give consumers a 'breathing period,' whereby they are allowed to find alternatives.
This is the result of financial institutions selling PPI alongside borrowing, without making the options clear to the customer.
This is the result of a Competition Commission crackdown, after an investigation highlighted problems that exist within the sector. They feel that in certain scenarios it is unnecessarily sold to people, and from the perspective of financial institutions, it exclusively costs too much.
The whole idea is for the policies to protect customers if they are put in a predicament whereby they cannot make repayments. This is great, but not when they are adding something like a third to the overall borrowing.
The only real problem that this may create, is people not buying insurance when they need it most, but this will only become the case, if people are not provided with the necessary information, in regards to their options.
If people are informed of the cheap PPI that they can get with independent insurance companies, then the problems will be eradicated.