Competition Commission states still a problem with loan insurance sales
June 29, 2008
Officials from the Competition Commission have stated that there is still a serious problem with the sale of payment protection insurance, which is sold alongside loans and other forms of credit. This type of cover can be very costly, and in the past there have been a number of investigations, as it was found that many lenders and providers were selling the cover inappropriately. It was found that many were selling the cover to those that could never benefit from it, such as the retired or self employed, some were pushing consumers into taking out the cover even if they were reluctant, and others were adding the cover onto the finance deal without the knowledge of the borrower.
One official from a campaign group recent stated: ‘We’ve always known that people were being mis-sold payment protection, but we were still amazed to discover the scale of it. It appears that salespeople are chasing their commissions, their bosses are chasing profits - where’s the sense of responsibility to the customer?’
It is thought that around one third of consumers may be paying a fortune for payment protection insurance cover that they can never benefit from, and the Competition Commission plans to crackdown on this continuing problem. It has suggested that it may place a cap on the amount that can be charged for the cover in order to reduce the number of people being ripped off by having to pay extortionate prices, and has even suggested that it may stop the sale of cover alongside loans, which means that consumers would have to purchase it separately resulting in less pressure and more choice.
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