Banks Are Under Pressure to Cease Selling PPI Finances

By the end of this month some of the country’s largest high street banks will cease selling single premium Payment Protection Insurance known as PPI because of continuing pressure from the City Regulator. Payment Protection Insurance is generally sold to cover repayments on unsecured loans, such as credit cards in the event of unemployment.

The Financial Services Authority said it sees the need for “appropriate protection insurance” in the present economic environment. But added that it was seriously concerned about the sale of single premium Payment Protection Insurance, where the price of the insurance – frequently thousands of pounds – is added to the loan and then interest charged on this amount. The managing director of retail markets with the Financial Services Authority said they were pleased these Banks have stopped selling single premium policies, and that they hope other firms would review their positions.

So long as PPI policies are sold appropriately they can be helpful to customers wanting protection on a specific credit agreement. The FSA said that some of these banks, along with other firms, now intend to offer regular premium PPI instead of selling single premium Payment Protection Insurance alongside unsecured loans.

The managing director of retail markets with the FSA said that customers being sold this type if insurance should be told how the insurance works, what it covers and also what it costs. Tackling inappropriate Payment Protection Insurance sales is a priority for the Financial Services Authority. After the market had not fully responded to its cry to comply with sales standards the FSA said it would be escalating its regulatory intervention. A large building society has been fined a record seven million pounds for serious failings in its telephone PPI sales and the FSA has taken action against a further 20 firms for miss-selling PPI.

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