Loan insurance policies 'to be scrapped'

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Loan insurance policies 'to be scrapped'

Fri 29th May 2009

Lenders have been told to stop offering their customers single premium payment protection insurance (PPI) when they opt to take out loans with them, it has emerged.

The Financial Services Authority (FSA) has made the demand, stating that banks and other lenders should halt the practice by the end of this week, reports the Press Association.

Following an unfavourable report on the issue conducted by the Competition Commission, the body said it would be banning PPI as of October next year.

However, the FSA called for this as early as February 2009 and has now urged all lenders to halt PPI as soon as possible, due to concerns over quality of service.

"No firms will be selling single premium PPI on unsecured personal loans from today following FSA intervention and action with the industry," an FSA spokesman stated.

PPI is designed to cover those who have taken out a loan but find that they are unable to work due to redundancy or illness.

According to AA Personal Loans, one of the most popular types of borrowing for Brits is a home improvement loan, as their appetites for revamping their surroundings have not been dampened by the recession.

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