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Future Ban On Payment Protection Insurance
The financial world has suffered heavy losses over the last few years as we all know through the global economic downturn
. And just as the UK banks thought it couldn't get much worse, thousands upon thousands of the UK population started to get wise about a new scandal, commonly known as Payment Protection insurance (PPI).Payment protection is insurance designed to cover the cost of any loan you may have taken out in the event you cannot make the repayments, due to illness or injury. The idea in itself is a good one, as if you fall ill and cannot work then for example you are safe in the knowledge your mortgage would be paid by the PPI you have.
Unfortunately this has not been the case, and the truth is that the majority of people with a PPI has either been misold, didn't know they had been sold PPI or have been sold the wrong type of PPI which doesn't actually cover them. So we have a situation where thousands of people are paying their cash into a scheme that is of no use to them whatsoever and would not even pay out in any case.
So what was the point in PPI you might ask? The answer is pure profiteering by financial institutions, to the tune of 4 billion pounds annually, all based on false information provided to the customer.
Well it all looks to be over for the banks. On top of the millions of PPI customers claiming back money they have unnecessarily paid out (to the tune of 177 million in the first 11 months of 2009), the Competition Commission has recently stated that it will ban the sale of PPI alongside the sale of financial products such as loans, credit cards and mortgages.
This decision means that the banks will no longer be able to sell this highly controversial insurance product at the time they decide to borrow, or during a fixed term after they have taken out the loan.
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