According to Simon Burgess of British Insurance, the latest Competition Commission Working Paper indicates that it will eventually put an end to this practice after it found lenders were making too much revenue from sky-high policy charges.
Entitled 'The Profitability of PPI,' the paper highlighted that the average revenue earned by one lender selling single premium personal loan PPI was £1,200 for each policy it sold.
It also revealed that the losses made in the personal loans market had been propped up by profits from PPI sales, indicating the lucrative nature of selling the highly-priced product.
“Consumers have always had a choice where and how they purchase PPI, it’s just that they’ve never been told about this by the people offering the loan," said Burgess.
"The Commission will drive through change and the writing is on the wall for lenders who think they can get away with offering a ‘one size fits all’ policy that in many cases, does not reflect the needs of the consumer.”
Currently, more than 90 per cent of the sector is in the hands of high street lenders, dwarfing other providers.
