"This is a valuable first step towards providers accepting that single premium payment protection insurance (PPI) is bad value for the customer. We believe that single premium PPI policies should be outlawed and urge the rest of the industry to follow suit.
"We share the FSA's concerns about adding the loan and PPI premium together because it attracts higher rates and feel that this should be prohibited. There are other premium financing facilities available which allow the consumer to switch to monthly premiums and offer the consumer more choice and control.
"PPI is a useful product, and consumers need to assess if it is suitable for their individual requirements and need to be aware that cover is available, and often cheaper, from providers other than from where their loan was purchased. I strongly recommend that individuals looking to purchase this cover contact an insurance broker or intermediary who specialises in PPI rather than choose a policy which is tied to a loan."
Citizens Advice debt policy officer Peter Tutton commented: "We welcome the move by the major high street banks to stop selling single premium payment protection insurance (PPI) with unsecured personal loans by the end of this month. These premiums are very expensive and can add substantially to the cost of a loan, often increasing people's debts instead of protecting them against hard times.
"However we still have concerns about the high price and poor quality of many PPI products, and there is still a long way to go in tackling these problems. Things haven't moved as quickly as we would have liked on this front. Given where we are with the recession, it's vitally important that people have access to the reasonably priced, effective, good value policies they really need."
In September 2005 Citizens Advice made a ‘super complaint' to the Office of Fair Trading, calling on them to launch an investigation into the payment protection insurance (PPI) business, which at that time had an estimated 20 million policies in force and produced annual revenue in excess of £5 billion.
