Customers are being left unable to make an informed decision when taking out payment protection insurance (PPI), new research has found.
According to the Financial Standards Authority (FSA), some firms treat their customers “unfairly”, with the FSA identifying three main areas of concern over the selling of PPI.
PPI, which protects a borrower if they are unable to keep up with repayments due to an instance such as illness, is available on most types of personal loan, credit card or mortgage.
However, the FSA found that some firms are not informing customers adequately on the cost and optional basis of PPI. In addition, many borrowers are not being made aware of parts of the policy that cannot be claimed under.
The FSA also stated that firms may not always have the customers’ best interests in mind when selling single premium policies versus regular policies.
“Despite some improvements in standards, major weaknesses remain which go to the heart of the culture surrounding PPI sales,” said Clive Briault, FSA managing director of retail markets.
He continued: “Customers should come away from the sale having been given the best possible chance of understanding that PPI is optional, what the policy will and will not cover and how much it costs.”
Those looking to borrow have been advised by the FSA to shop around for PPI and compare possible benefits, as it does not necessarily have to be purchased from the lender.
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