New information service for PPI consumers

23 June 2008

Watchdog launches tables to advise consumers on PPI

Consumers interested in buying payment protection insurance (PPI) can now go to the Financial Services Authority (FSA) website to get advice and information.

The consumer watchdog has launched a comparison service as part of their ‘Money Made Clear’ website and has been designed to help customers compare the different policies on offer based on how much they cost and the level of protection offered.

PPI is a type of insurance which offers the policyholder cover in the event that accident, sickness or unemployment renders them unable to meet their mortgage, loan or credit card repayments.

The product has seen some controversy especially when this month the Competition Commission claimed that some insurers were overcharging their PPI customers by around £1.4bn per year.

According to a spokesman for the FSA, the tables are “a starting point to give customers basic information about what the policies offer and what they cost”.

“PPI is almost always optional and consumers need to consider their own financial circumstances when deciding to purchase it and make sure they are clear about what will be covered,” he added.

How PPI has been sold has been surrounded by controversy for many years with Citizens Advice describing it as a “protection racket”.

Some financial companies have been fined by the FSA for mis-selling some PPI policies that are too expensive or fail to provide the cover they first offered.

Over the course of the last financial year almost 11,000 people lodged complaints to the Financial Ombudsman Service about the PPI policies they had purchased.

Research conducted by the FSA found that the main way companies were unfairly treating their customers was by not giving them the information they needed to decide whether or not they needed the insurance.

The aim of the new service provided by the FSA is to try to provide this information so the consumers can make an informed decision about PPI policies.