Concern over personal loan PPI

A new report has expressed concern on the finding that UK banks charge up to 80 per cent commission on payment protection insurance (PPI).

Research published in a report by the Competition Commission (CC) found that high costs are applied by banks when PPI policies are linked with personal loan and credit card policies.

The cost of PPI was found to be higher in some instances than the interest paid on the loans themselves, CC deputy chairman Peter Davis noted.

Some ninety per cent of PPI sold in the UK last year was linked with personal loan, credit card or mortgage policies.

Post Office head of protection products Duncan Ceasar-Gordon commented that many companies are unaware of the extra costs incurred by adding PPI to a loan, which can lead to an 18 per cent increase to the annual percentage rate.

“Those who have been at the hands of aggressive sales tactics can feel they have little choice but to take the expensive policy tied to a loan or credit card if they want their application to be accepted,” he said.

Financial Services Authority managing director Clive Briault said stronger action will be taken by the body against firms who’s PPI selling fails to meet treating customers fairly criteria.

© Adfero Ltd

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