Time Ticking for Payment Protection Insurance?
I’ve waffled on a few times about this before and, even though it’s gone a little quiet recently, I think the days are nearly over for Payment Protection Insurance (PPI) in its current guise. There is just too much pressure being put on it by newspapers, financial commentators like Martin Minted Lewis, the regulators like the Financial Services Authority (FSA) and Office of Fair Trading (OFT) and by pressure groups like the Citizens advice bureau (CAB).
By the end of the year we are certainly going to see some form of action by the OFT and its more or less going to force the industry to make the following sort of changes.
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Easier to understand documentation
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What can and can’t be claimed for to be clearly defined
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Pro-rata refunds if the loan is cancelled
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Ability to cancel just the PPI element, but carry on with the loan
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We may see comments about the APR not including PPI
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Providers may be forced to reduce their margins
The overall affect of this will be a reduction in commission paid to secured loan introducers, but this may be offset by upstream loan providers doing something to protect their margin.
I note this week, we see the Nationwide offering an incentive for customers taking out PPI in October. Anyone taking out a personal loan with LoanCare insurance (Nationwide’s brand of PPI) between October 2, 2006 and November 30, 2006 will qualify for cashback of 20% of their insurance premium at the end of their loan term
But surely this is just a sales gimmick and not an attempt to appease the regulators like the OFT and FSA.
