Unfair credit agreement specialists Credit Clear U.K have welcomed new measures introduced by the FSA, in a bid to regulate the sale of PPI and ensure a fairer deal for consumers.
Under new legislation, financial institutions such as banks and building societies will be prohibited from selling PPI to customers for seven days after the initial credit agreement. This is in a bid to ensure that consumers have enough time to shop around for the best deal, and are not pressured into signing an agreement at the point of purchase.
This ruling comes following a 2 year investigation into the PPI market by the competition commission, which found that almost 95% of all PPI was sold at the same time as a loan or credit agreement. Most providers of credit faced no real competition in selling these policies, resulting in many customers being overcharged.
In many circumstances, consumers mistakenly believed that taking out a PPI policy would improve their chances of obtaining credit, or in some cases that the policy was a condition of the loan.
In another change, the sale of single-premium PPI will be banned from October 2010, after the report found that such policies restricted consumers from switching providers and were generally more expensive than monthly payment plans.
Several major banks, including RBS/Natwest and the Lloyds group anticipated this new ruling and ceased selling such policies in January of this year.
Credit Clear Managing Director Lee Lummis commented on this news by saying:
“This new legislation will mean that consumers have more freedom to choose the PPI policy that is most suitable for them and have greater protection against being misled and mis-sold protection.”
Continued:
“Previously, financial institutions had a significant point of purchase advantage and certain unscrupulous companies used this to their advantage, by mis-selling policies to un-informed consumers. This threat has now been removed, meaning a fairer deal for consumers.”
