|
The Consumers for Loan Insurance are being overcharged
The competition watchdog says that the consumers are being overcharged by over 1.4 billion pounds a year from the sale of insurance to cover repayment of loans when they fall ill and industry price caps may be introduced.
 Print View
June 9, 2008 (FPRC) -- LONDON. On Thursday, the Competition Commission said in a provisional findings report that it was considering a list of measures to increase competition for payment protection insurance industry (PPI), including banning the sale of PPI at the same time a loan is arranged or the possible introduction of a price cap.
The banks have prepared for a significant clampdown on the industry, however a price-cap would be more abrasive than expected.
Mr Bruce Packard, an analyst at Pali International said, "It is unclear what the Competition Commission is going to do, but it has listed some quite draconian options".
The PPI covers defrayal of mortgages, credit cards, personal or other loans when people fall ill, injured or unemployed. In addition, the PPI is a highly profitable area for banks, and it is also estimated to be worth over 5 billion pounds a year.
Analysts said that such restrictions could hurt profits for Alliance & Leicester, Lloyds TSB and most other UK banks.
The Commission also stated that currently, there are more than 14 million PPI policies and most are taken out at the same time a product is bought. The consumers should be provided with more information about other policies and prices on the time of offering.
On this issue, Peter Davis, head of the Commission's inquiry stated that "We have found serious problems with the PPI market. Moreover, the customers are paying for the lack of competition."
"We are looking at measures which will improve competition between providers, so that consumers who do compare products, or seek to switch, find better offers to choose from," added Mr Davis.
The Association of British Insurers recognised that there have been problems in the PPI market but said changes have been introduced. Furthermore, it said "We are very concerned that the Competition Commission's proposed remedies could destroy this market, particularly while we are facing a period of economic uncertainty".
For additional information on the news that is the subject of this release (or for a sample, copy or demo), contact Webmaster or visit http://www.ask4loan.co.uk
Send an email to amenda dorothy of Shakespeare Finance Limited
0800 097 3653
Keywords:
personal loans, quick personal loans
|
