Officials from the FOS have said that they are dealing with around eight hundred complaints every week in connection with loan related insurance in the UK, and that the number of complaints that were being upheld was unprecedented. The complaints are in relation to Payment Protection Insurance, or PPI, which is sold alongside loans, but sweeping changes are soon to be enforced with regards to the sale of this type of cover.

The PPI cover that is sold alongside loans is designed to cover the policyholder for repayments for a specified period of time in case they are unable to make repayments due to sickness, redundancy, or accident.

However, consumer campaigners and various other groups have long since criticised the cover because it is costly, has been widely mis-sold, and with single premium PPI is added to the loan, thus resulting in the policyholder also having to pay interest on the cover as well as on the loan itself.

A spokesperson for the FOS said: “It is still the single biggest source of complaint, amounting to about a third of the total. We are upholding about 90% of the cases we deal with, and with one firm 100% of the cases.”

According to officials there are often many restrictions with regards to policyholder’s claiming on the policy, and it is often being sold to people who can never make a claim on it anyway.

She added: “We are upholding an unprecedented number of consumer complaints about PPI. We have reported our concerns about some firms who seem to be systemically and deliberately mis-handling complaints.”

Increase in complaints about loan insurance is a post from: Glitec Loans

The Financial Services Authority has said that lenders will have to stop selling single premium PPI by the end of May.

The chief executives of companies that currently sell single premium PPI have been contacted by the Financial Services Authority, and have been informed that they must stop selling this costly cover by 29th May.

This came after the Competition Commission decided on a ban on the sale of this type of PPI following heated controversy and its own reviews. With single premium PPI the cost of the cover is added to the amount borrowed in a lump sum, and this means that the borrower ends up paying interest on the cost of the insurance as well as on the loan itself.

In the letter that was sent out to firms the FSA stated: ‘We therefore request that if your firm has not already done so, it stops selling single premium PPI with unsecured personal loans as soon as possible and in any event by 29 May 2009. In view of our ongoing concerns across the single premium market over the standard of sales, we believe this request is justified to bring an orderly withdrawal of single premium PPI from the market.’

PPI has been sold alongside credit and finance for many years, and this includes credit cards, loans, and car finance. It is designed to cover the repayments on the debt for a specified period of time in the event that the policyholder cannot make repayments due to sickness, injury, or redundancy.

Single premium PPI to be stopped soon is a post from: Glitec Loans

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 Loans

The errors are said to have been made in the small print of personal loans for between £5000 and £25,000, and this included errors such as miscalculation of the APR and fees. Officials have said that consumers are more likely to be able to claim if PPI was added to the loan at the time that it was arranged.

PPI, or Payment Protection Insurance, is a type of cover often sold alongside loans, credit cards, and other forms of finance.

One solicitor stated: ‘Most loans will not be sufficiently defective in law to guarantee claimback success but chances are increased if a PPI premium was added at the time the loan was arranged. Lenders are preferring to settle out of court if there is a case to answer.’

A claims management official said: ‘There are undoubtedly thousands, if not millions, of other unfair loans out there still to be checked.’

As expected the British Banking Association is none too pleased with these findings, and one official from the BBA said: ‘Debt problems need to be faced properly – attempting to get debts written off is not a good way to do this.’

Many borrowers could sue over loans is a post from: Glitec Loans

PPI came under fire because there was evidence that it was being mis-sold to the tune of billions of pounds, with m any people being sold the cover even though they were not eligible to ever claim on it, others having the cover added to their finance without their knowledge, and some people being told that they had to take the cover in order to get the finance that they wanted. PPI is designed to meet repayments on a debt in the event that the policyholder is unable to work and earn money due to sickness, injury, or redundancy.

However, despite the controversy over PPI many people may now be questioning whether now is the time to take out this type of cover, given the rising level of unemployment as struggling firms make huge cutbacks in staffing levels. With reports that giants such as RBS and BT have decided to cut back on the jobs of thousands of staff members it is understandable that many may be worried about how they will handle their debts in the event that they lost their jobs.

Industry officials have said that there has been a marked increase in enquiries about PPI over recent weeks, as worried workers try and assess their options in the event that they lose their jobs. Whilst the protection can prove valuable for many people, and can provide valuable peace of mind, experts have warned that there can be catches, which the consumer needs to look out for, and it does not come cheap.

Some have suggested that consumers look at stand alone income protection, which covers your income in the event that you are made redundant, and the cost of this cover can vary but can start at as little as £2 per month. It is normally a set fee per £100 of income insured, and policyholders could enjoy cover for twelve months in the event that they are made redundant.

One official said: ‘Rates vary widely, from as little as £2 a month to more than £5 per £100 guaranteed.’

He also warned: ‘Many accident, sickness and unemployment policies have a clause in the small print that allows the insurer to cancel the policy or raise rates with just 28 days’ notice. If there is a severe slump and insurers start paying out lots on unemployment claims, then some may pull the plug.’

Is now the time to take out PPI? is a post from: Glitec Loans

The UK’s financial regulator, the Financial Services Authority, has been clamping down on those found to be mis-selling this cover, and a number of lenders and providers have been fined over recent months, with one lender, the Alliance & Leicester, being fined around £7 million as a result of these breaches. More recently further probes and investigations have been launched into the sale of PPI following the receipt of a record number of complaints from PPI customers.

An investigation by the Competition Commission has revealed that there is very little competition amongst providers of PPI, and many credit card firms and banks are making a fortune from consumers who are taking out these policies along with their credit cards, loans, and other forms of finance. The lack of competition means that consumers that want to shop around for a more affordable policy and those that want to switch to another provider will find it difficult to find something that is better suited to their needs and pocket.

This type of insurance cover is commonly sold alongside financial agreements, such as loans and credit cards, and the purpose of the cover is to cover repayments on the debt for a specified period of time in the event that the policyholder is unable to work due to sickness, injury, or redundancy. However, ongoing investigations have revealed that the cover has been sold to many consumers that would never be eligible to claim, and that some lenders have convinced consumers that they have to take the cover from them along with the loan or card. Some lenders were found to be adding the cover onto finance deals without informing the consumer at all.

Whilst authorities have been trying to stamp out these problems through stricter regulations and by imposing fines, it appears that the problem is still ongoing. Many consumers are still complaining about PPI, and the FSA recently conducted a mystery shopper exercise to better evaluate the problems. It was found that lenders were failing to provide adequate details about the policy to consumers, and that few consumers were fold that the cost of the cover would be added to the loan and that they would then have to pay interest on it.

A number of possible solutions are being considered to try and stop the issues connected to PPI sales. This includes stopping certain firms from selling the cover, stopping lenders from selling the cover at all alongside credit agreements. Another solution being considered is heftier fines for those firms found to be breaching PPI sale regulations.

Competition Commission concerned over competition with PPI is a post from: Glitec Loans

The PPI market has now been criticised by officials from the Competition Commission, who have claimed that there is little competition between providers and the cover is netting a lot of profit for providers. The Competition Commission has said that the lack of competition between providers meant that consumers did not get the chance to find a better or more affordable deal elsewhere.

It is thought that credit card companies and banks are overcharging consumers to the tune of £1.4 billion a year in respect of PPI, and the commission is looking at different ways in which the problems with PPI can be tackled. The Financial Services Authority has already been tackling the problems by imposing hefty fines to the tune of millions of pounds in some cases for the mis-selling of the insurance.

The FSA recently carried out a mystery shopper exercise, and it was revealed that many PPI providers were failing to provide details of the cover to customers and were also being pushy about making the customer take the insurance cover out.

PPI has very little competition says Competition Commission is a post from: Glitec Loans

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 PPI further this could result in an industry-wide review and could result in forced changes to the sale of PPI.

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

In the past trying to take out finance with any type of lender without being hounded relentlessly about taking out payment protection insurance was pretty much unheard of, but these days lenders and finance companies are far more careful about how they try and sell this cover. PPI is a costly form of cover, and for many people the cost added to the cost of the actual finance was not manageable. However, many lenders and finance companies have not paid any heed to affordability, but have been more interested in actually selling the policy.

The reason for this sudden caution from many lenders and finance companies these days is because of a clampdown from the financial regulator, the Financial Services Authority. For some time the FSA has been investigation the sale and effectiveness of PPI and came up with some rather worrying conclusions. Firstly, it emerged that many of the people that were being sold PPI – which is sold with all sorts of finance, such as credit cards, loans, catalogue accounts, etc – would not actually be able to claim on it because they would not have been eligible. For example, those that were self employed could not claim for redundancy. However, the FSA investigation found that the ins and outs of PPI were often never explained to the consumer.

It was also found that consumers were being misled with regards to PPI. Some lenders and firms were making out that the consumers would not get finance without taking PPI, which is not the case. Others made out that the PPI had to be taken through themselves, which again is not the case. Some even added PPI to the finance without the knowledge of the borrower, resulting in the borrower having to pay far more than was necessary for their borrowing because of insurance cover that they may not even have wanted.

Of course PPI can provide peace of mind for some people, but if you are thinking of taking out this sort of cover you should bear a few things in mind. Firstly make sure that you are eligible to claim under the terms of the policy. Also, remember that it is not compulsory and if you do want to take it out you can choose your own provider, so take the time to compare policies to find the best one for you. The FSA now has guidelines and assistance for those wishing to take out PPI on its website, so this could be a good starting point if you want to take out this cover.

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Should you consider payment protection insurance? is a post from: Glitec Loans

All types of loans offer this type of protection, from unsecured credit cards to secured loans such as mortgages. But what’s the real cost of this protection, and is it worth it? An estimated one billion pounds are spent on buyer protection insurance each year.

As the lending industry becomes more and more competitive, lenders are seeking ways to bring in more pounds to offset the lost revenue from lower interest rates. Offering various add-on sales is one way to do this, and buyer protection is one of those add-on services.

The fact is that buyer protection can cost the consumer almost as much as the cost of the interest, nearly doubling the cost of the loan. Therefore, consumers have to carefully weigh the costs against the protection and decide for themselves if the purchase is worth it.

In an unstable economy, such protection may be welcome and may afford the buyer peace of mind. This in itself can sometimes be worth the cost, but not always. Each program is different in what it covers and what the restrictions are, and buyers need to read the fine print to fully understand what types of situations are covered and in what circumstances.

It could be that the policy will not cover a layoff situation, or only covers unemployment after a certain period of time in which the applicant must demonstrate an active job search. In addition, as with other types of spending activities, it pays to shop around. The lender’s program may be much more expensive than an independent policy, and the coverage may be better. Researching options could save consumers money.

Of course, there’s always the option of not purchasing the buyer protection policy. If this sounds risky, consider that this type of protection is relatively new. It’s a gamble, of course, in that you never know if you’ll need it, much like insurance coverage.

It may be nice to know you have it, or you may decide it’s not worth the cost. Before signing on for such a program, be sure to read the fine print. The new loan laws are useful in this regard, but it’s still up to the consumer to be fully informed. Consumer protection agencies continue to receive complaints about information not being clear despite the government’s new policies.

Chances are, if you apply for a loan, you will be pressured into purchasing this type of protection.

Bear in mind that the person selling the policy may not know much more about it than you do. Lenders are also required to disclose all restrictions on such policies as well as the purported benefits, but this does not always happen. The bottom line is that the consumer is ultimately responsible for his or her financial situation and remaining informed.

Payment Protection Insurance: The True Cost is a post from: Glitec Loans