Benefiting From The Ban On PPI
Friday 21 November 2008
As if PPI (payment protection insurance) had not been negating the ravages of infamy these past couple of years, it has once again been slung in front of the spotlight by way of the Competition Commission (CC) banning its sale alongside borrowing and also putting a stop to it being sold in a single-premium fashion.
The decision has invoked a mixed response as some feel it will revive confidence in a much deflated sector. Others are of the opinion that the CC has gone too far – far too far.
A representative form some advice source has expressed his glee at the decision by stating that it will stop bad broking. An example of bad, or underhanded broking is when the broker says to a client something along these lines – you’d do well to get that cover because if you do not get it with the loan then the company will not even give you the loan so you really do not have any choice.’ As terrible as this may sound it does happen and in some cases it can add half a decade of thousands onto the overall cost of a borrowing.
Another representative, this time from a company named as Highclere (sic) Financial Services said that the news was good news because PPI policies in general when sold alongside borrowing are inadequate, overstated, oversold, and overpriced. He made reference to the value of getting PPI from a company that is independent of the company that a borrowing is procured from.
There are particular ranks that are against the new ruling though. A person from Lifesearch has been thinking from a left field standpoint and come up with the thought that people that are not sold PPI along with their borrowing will choose to not get any protection whatsoever. With the current economic situation this could mean that a lot of people are going to be without a job and without any means to pay back the borrowing.
The ideal solution would be for banks to be given the opportunity to offer customers payment protection in a fashion that is not exploitive. Perhaps if the customer was asked straight out if they would like to protect their borrowing instead of not being told about it at all or being quoted prices on loans that are already inclusive of PPI so that consumers assume that it is essential. If the banks could be trusted with the autonomy that they receive and also if they weren’t constantly trying to profiteer at a cost to the prole then this problem wouldn’t exist in the first place.
If insurance companies can charge far less for PPI then it hard to see why the banks cannot bring the cost of they’re polices down. It has been mooted that banks charge the prices that they do because they do not make enough money from personal loans but if they were somewhat more honest in their dealings with customers and said that the APR on a loan was higher instead of trying to mask it with ludicrously priced PPI then it is obvious that customers would appreciate the transparency and would still take out the loans because they need to borrow money anyway.