Providers Still 'Fooling Borrowers With PPI'

Everyone who has ever applied for a loan or credit card in the last ten years will have been offered Payment Protection Insurance (PPI). Many of us are still not really sure what they are signing for and financial institutions still seem to be glossing over the benefits.

The consumer group Which? has stated that customers may be fooled into taking out payment protection insurance (PPI) when they apply for a loan. Out of 41 service providers contacted by the body in a mystery-shopper exercise, 24 included PPI costs within the explanation of loan details.

A number of lenders quoted both with and without PPI; just one quote didn't include it at all. The results were similar; several initially quote with PPI and the borrower has to click through to another page to get a quote without it.

Only two lenders had the option at the start of the process whether they want a quote with or without PPI. Payment protection insurance (PPI) isn't compulsory and income protection insurance is a much better option for most people.

The watchdog claims that people may be unnecessarily being confused by quotes for PPI and being tricked into taking out unsuitable insurance. Critics say that PPI is overpriced for what it offers; a 'backup' if a customer is unable to keep up repayments on a loan if they fall ill or are unable to work. The editor of Which? Money said that the automatic addition of the service to a loan application is confusing the process for customers.

"PPI is not always suitable, yet our research shows that lenders are still extremely keen to sell it to us," he said. "By adding PPI to loan quotes automatically, people could be tricked into buying it regardless of whether they need it or not."

Which? says that it campaigns on behalf of the consumer to point out and compare deals in a multitude of fields including technical equipment and money services.

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