Launching its loan protection cover, Britishinsurance.com claimed high street providers were still cashing in at customers’ expense, and charging up to 12 times more for their policies. This comes at a time when the market is under review from the Competition Commission and has been blasted for poor practice by the Office of Fair Trading.
The Financial Services Authority (FSA) also claims to be working hard to protect consumers, although the huge spread of premiums for loan protection insurance means consumers are paying significantly over the odds for their cover on a daily basis.
According to British Insurance, for a £7,500 loan over five years, taken out by a 30-year old couple with a monthly repayment of £147.33, insurance over the life of the loan is £3591 with Bank of Scotland. This means Bank of Scotland is charging £40.62 for every £100 of cover, compared to £3.25 by Britishinsurance.com.
Over the life of the loan, a borrower using Britishinsurance.com’s policy would save £3303.60 in comparison to that offered by the bank.
Simon Burgess managing director of Britishinsurance.com said: “There is simply no excuse for providers to be charging such high prices and there can be no way in which to justify them. It is incredible that the FSA has not taken action to abolish this sort of practice, which fails to treat consumers fairly on so many different levels.”
Burgess said the industry needed not only to stop providers charging outrageous prices, but also educate consumers to the fact they were being ripped off, and show them how easy it was to take out protection insurance independently of their loan.
“If a supermarket started selling milk at £4.80 a pint, instead of 40p, it is difficult to believe it would not be accused of profiteering and quickly brought back into line. That high street providers can do this with loan protection shows how little competition there really is in the market. It is imperative consumers are helped to understand that better value cover is freely available.”
Of the top ten lenders in the market, Britishinsurance.com claimed even the nearest competitor was over four times more expensive than it was, which Burgess believed made a mockery of lenders’ claims to look after customers’ needs and treat them fairly.
“Loan protection continues to be used by many banks and building societies as a way to swell profits rather than cater for customers’ needs,” said Burgess. “In many instances the policies being offered by the high street providers are not even as comprehensive as those from the independent providers and yet they are vastly more expensive. The sooner consumers can be educated to start voting with their feet the better.”
