The study also found that high-street lenders have total disregard for the ‘Treating Customers Fairly’ initiative by selling PPI policies that are designed to pay less than 10 per cent of premiums in claims.
It is not only the prices that lenders are appa rently guilty of but the quality of cover they are peddling to their customers is described as 'grossly inferior'. For example, lenders PPI tends not to pay out until after a 60 day excess period whereas those sold through specialist brokers usually offer back-to-day-one cover.
Furthermore, lenders normally prevent people with pre-existing medical conditions from switching without further medical underwriting, whereas those who buy via the specialist market can avoid this problem with fully portable policies.
It is therefore unsurprising that the FSA has recently described PPI policies as posing a risk to consumers’ financial health and has raised concerns about aggressive sales techniques, lack of suitability and complex policy terms and conditions.
Anna Bradley, Consumer Sector Head at the FSA, said: "We are looking into payment protection as an urgent matter because we are conscious that it is a high risk area. We want to make sure firms are adhering to our rules, although our main aim is to avoid a major problem, rather than having to mop one up."
Burgesses Limited Managing Director Simon Burgess says, "Borrowers must not pay the price of apathy and feel obliged to take out PPI from a lender. By shopping around, not only can they save thousands of pounds but can obtain superior cover for the time they need it most."
