The Office of Fair Trading (OFT) is to launch an investigation into Payment Protection Insurance (PPI) schemes, regularly packaged with credit and loans.
PPI is often supplied as an added extra to homeowner loans, mortgages, credit cards and other forms of borrowing.
It is promoted as a way to ensure that payments don’t continue to mount up if the borrower is unable to keep up through loss of a job or illness.
But consumer groups say that many of the schemes are designed purely to make money for credit providers, and that PPI is often overpriced, mis-sold and designed to avoid paying out wherever possible.
The OFT investigation has been launched in response to a “super complaint” filed by 270 Citizens Advice Bureaux (CAB) based on complaints it has received from clients.
“This is a clear signal that the OFT believes there is a case to answer. It is very good news indeed, and it marks the first step to a better deal for UK consumers,” said Teresa Perchard of CAB.
“We would urge the industry not to wait for the outcome of the OFT investigation before reviewing their PPI products and making changes that will benefit consumers and give them a fair deal.”
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