Independent PPI provider Paymentcare.co.uk has said that brokers concerned with adhering to the Financial Services Authority’s policy of Treating Customers Fairly (TCF) can ensure their secured loan customers get a fairer deal on PPI by offering a stand-alone monthly paid policy.
Shane Craig, managing director of Paymentcare.co.uk, said that stand-alone PPI policies offer customers a credible alternative to expensive lenders-own offerings and provide much better value for money. The recently published findings of the FSA’s Insurance Conduct of Business (ICOB) review of the general insurance market indicate that consumers purchasing PPI continue to run a significant risk of signing up for poor value for money products.
Craig said: "With the FSA due to publish a consultation paper this month (June)* setting out proposed rule changes to the way PPI is sold, it’s highly likely that the soaring secured loans industry will need to address the issue in order to satisfy the ICOB recommendations. Payment protection insurance is an integral part of the secured loans process and it’s essential that intermediaries are aware of the PPI policies available to them. This will help to ensure that they treat their customers fairly.”
Single premium loan PPI has attracted considerable criticism since the investigation into PPI began. Craig continued: “Since the launch of the Office of Fair Trading’s investigation of the whole of the PPI market in September 2005, it has become abundantly clear that single premium loan PPI policies are not in the customer’s best interest. The cost of these policies is added to the loan and the whole amount then gathers interest, making the PPI exceedingly more expensive than necessary. A monthly paid policy from an independent provider offers far better value for money and can be cancelled at any time ensuring that customers only pay for the cover they actually need.
“Intermediaries must be clear on what it covers, what it costs and the fact that it is entirely optional,” said Craig. “Because PPI is a secondary purchase and therefore not the customer’s primary focus, it is often the case that they sign up for policies that they do not fully understand. By offering an independent option brokers can ensure their customers are buying PPI with their eyes wide open. Offering customers a stand-alone monthly paid policy will benefit both brokers and customers alike and will help to further strengthen the appeal of secured loans as a viable means of borrowing."
