13 November 2008
The Competition Commission has called for a crackdown on the sale of payment protection insurance (PPI) alongside secured loans and other credit agreements.
It claims lenders should be banned from selling the product at the time a loan is taken out. Instead, they should have to wait 14 days before contacting borrowers about buying PPI.
It is hoped that this would prevent PPI policies from being mis-sold to consumers, as consumers would have time to assess their needs and shop around for alternative products.
According to the Press Association, the competition watchdog is also considering a temporary price cap on PPI policies to reduce the cost of cover and it will demand better information for consumers to ensure they understand the product and are able to make more informed decisions about which policies to choose or whether to choose one at all.
PPI is designed to help consumers repay their loans if they are made redundant or cannot work due to illness or injury.
According to the PPI broker Payment.co.uk, sales of the products have been increasing rapidly amid concern over rising unemployment, the Financial Times reports.
© 2008 Adfero Ltd
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