Loan provider PPI “backlash” anticipated

By MoneyhighStreet Staff. Published on November 14, 2008 This post currently has no comments.

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Loan providers could introduce new charges for consumers following proposals to ban the sale of payment protection insurance (PPI), it has been claimed.

The Competition Commission (CC) yesterday unveiled a raft of proposals designed to improve competition in the PPI market.

One of the more controversial proposals was a ban on the sale of PPI within 14 days of a loan being agreed.

However, David Kuo, head of personal finance at money website Fool.co.uk has warned consumers that the decision could provoke a lending "backlash" from loan providers.

He said: "Payment Protection Insurance (PPI) has not only been the icing on the cake but the cake itself for loan providers.

"The difference between taking out a loan with insurance and one without can mean the difference between borrowing money at 17.8 per cent and 7.9 per cent."

CC proposals have already been described as "devastating" for borrowers, by the Association of British Insurers.