Specialist insurance broker Burgesses has revealed that consumers are being ripped off to the tune of £1000 for every loan they take.
The extra charges come from loan protection insurance designed to protect against unemployment, disability and death that borrowers don’t actually need or can’t claim for.
Burgesses takes a dim view, describing such action as “profiteering” and accuses lenders of “breaching FSA [Financial Services Authority] rules”.
A rise in demand for borrowing, and increased competition in the personal loans market, have seen lenders turn to “bolt-on” protection insurance policies to make profits, and are said to take in £22 million a day, or £8 billion per annum, in commissions.
Simon Burgess, managing director of Burgesses, said: “It’s not that we mind lenders making a profit – that is what they are there to do.
“What we object to is the profiteering of customers, who are often the most vulnerable, and selling them cover, which is all too often useless.
“It brings the whole industry into disrepute and must be stopped.”
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