24 January 2007
Secured loan customers are claimed to be among those being misled when it comes to the mis-selling of payment protection insurance (PPI) policies and now one critic has accused unscrupulous lenders of using them as cash-cows.
Shane Craig, managing director of Paymentcare.co.uk, declared that some lenders were still coercing a large number of consumers to take out PPIs, which are usually at a highly-inflated cost and rarely offer value for money.
His comments arrived on the back of a BBC report which claimed that the ten lenders were due to be fined as a result of them consistently mis-selling PPIs to naive consumers.
Mr Craig also claimed that many consumers were not aware that a PPI was an optional extra which some debtors would not be able to claim on if the worst happened.
"Basically, loan PPI has been hijacked by banks and lenders as a cash cow to generate huge profits by charging consumers over-inflated premiums," said Mr Craig. "The worrying consequence is that consumer confidence in PPI will be further damaged."
Mr Craig said that Paymentcare.co.uk was campaigning for the Office of Fair Trading to make PPIs a stand-alone policy to remove the possibility of being forced into taking one out.
"Paymentcare.co.uk wrote to the OFT in September 2005, suggesting that lenders should not be allowed to cross-sell PPIs at the same time as the loan and thereby removing the possibility of any mis-selling allegations," he said.
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