However, one industry official has expressed concern that this ban on PPI at point of sale could actually adversely affect some customers, as it could mean that they are left unprotected and uncovered should anything go wrong. Finance journalist Lorna Bourke said that Britons could be left at greater risk as a result of this ban because they would have no cover in place.

The Competition Commission has already tried to ban PPI in the past, but some of the major banks appealed against this and their appeal was upheld. The ban on point of sale PPI could affect customers who do not bother or think about taking protection out elsewhere but will also affect the lenders themselves who could lose out because of the ban.

PPI is designed to cover repayments for the policyholder for a set period of time in the event that they cannot make repayments due to sickness, injury, or redundancy. However, these policies hit the headlines after investigations showed that the policies had often been mis-sold to those that did not want them, did not need them, and in some cases were not even eligible to claim on them.

Ms Bourke stated: “There is a real danger that banning all PPI policies sold alongside a mortgage or personal loan could result in borrowers having no protection at all. This could mean homebuyers losing their homes if they are unable to meet repayments.”

Borrowers could be at greater risk due to PPI ban is a post from: Glitec

Once the ban on the sale of the cover has been put into place lenders will no longer be able to sell this cover alongside credit agreements. The Competition Commission has also reduced the amount of time that lenders must wait before contacting customers to see if they want the cover, from fourteen days to seven days.

As part of the rules consumers will be able to contact the lenders themselves within twenty four hours if they wish to take out the cover, which is designed to cover repayments on a debt for a specified period in the event that the borrower cannot make repayments due to sickness, injury, or redundancy. Single premium PPI sales will also be banned under the rules, and this is where the cost of the cover is taken as a lump sum and added to the loan, which means that the borrower has to pay interest on it.

However, the Association of British Insurers has expressed concern that the ban on PPI could cause problems for many borrowers, particularly given the current economic and financial climate, where many were concerned about losing their jobs. PPI has been under fire for some years after investigations revealed that it was being mis-sold in a number of ways, and often consumers were being forced into taking the cover or having it added to their credit without even being told.

One official from the Competition Commission said that the measures had been put into place to protect consumers. He said: ‘Consumers’ interests are not best served when the only choice the vast majority have is whether or not to purchase their credit provider’s PPI product. The resulting lack of competition means that the only offer consumers get is simply worse value than they are entitled to expect.’

PPI with loans to be banned is a post from: Glitec

PPI is offered with financial products such as loans, credit cards, car finance, etc. The purpose of the cover is to provide peace of mind for the consumer, who is told that in the event that they are unable to make repayments on the loan or finance due to sickness, redundancy, or accident the repayments will be covered for a set period of time, giving them time to get back on their feet.

However, concern arose when it was discovered that some lenders or providers were selling PPI to those that did not even qualify for it, and in some cases were either hard-selling this costly cover or were adding it without the knowledge of the consumer. Over the past couple of years authorities have been addressing such issues in relation to PPI, and regulations over the sale of PPI have become far more stringent.

Recent reports indicate, however, that the FOS is still receiving around five hundred complaints a week in relation to PPI, and this has prompted a further probe by the agency. The FOS has now written to the FSA in order to get a more indepth investigation underway, and has expressed concern that many lenders and providers are failing to take problems and issues relating to PPI sales seriously enough.

There are concerns amongst FOS officials that the PPI market, which is said to be worth £5.5 billion a year, is getting out of control, with around two million people thought to have been mis-sold this type of cover over the past five years. Even the Competition Commission has become involved in the issues relating to PPI sales, yet even with three major authorities in the financial world involved in this clampdown the issues and problems continue to arise.

Industry watchdogs have also raised concerns over the fact that some customers have been led to believe that PPI is compulsory, when in fact it is totally optional. Around 1.3 million people are thought to have taken PPI with credit cards under the impression that they had to take out the cover in order to get the credit that they wanted. Past investigations have shown that this is the impression that some lenders have been giving to customers without actually saying as much.

It is thought that if the FSA does decide to investigate further this could result in an industry-wide review and could result in forced changes to the sale of PPI.

FOS still cracking down on loan insurance is a post from: Glitec