Consumers buy PPI to gain credit card approval
Which?, is once again on the offensive over Payment Protection insurance (PPI), which is sold alongside secured and unsecured loans to cover repayments if the borrower is off work because of illness or unemployment.
The consumer group claims that hundreds of thousands of Britons have bought PPI because they were under the impression that their card applications would be more likely to be accepted if they opted for the insurance.
According to the latest research by Which?, over than 9.8 million people in the UK have credit cards with PPI attached.
Around 13% (1.3 million people) said they bought the PPI to ensure that their card application stood the best chance of success.
Twenty-eight per cent of respondents reported that their credit card provider told them that taking the cover was a good idea.
However, Which? asserts that many of the policies will be difficult to claim against because they are peppered with exclusion clauses.
The Competition Commission is currently considering a ban on the sale of PPI at the point at which a loan is taken out.
The Commission estimates that lack of competition in the market has led to consumers being overcharged for PPI to the tune of £1.4 billion a year.
However, the most damning statistic from a report published by the Commission in June is that only 11% of claims are successful.
Further outrage on the subject has been caused by the high rates of commission paid to salesmen and women.
Commission can amount to up to 80% of the first year’s premiums.
Category: Health Insurance News, Insurance News
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