Payment Protection Insurance Regulations Tightened

On October 5, 2011, in Uncategorized, by Kesh Thukaram

In the recent months, there has been unprecedented amount of claims that the banks have set aside and paid on mis-sold payment protection insurance claims. The decision to pay the claims which ran into billions of pounds was first flagged off by Lloyds Banking Group. Lloyds led the led the pack by saying that they would pay back customers who have been mis-sold on payment protection and other banks such as Barclays, HSBC etc followed suit.
The Competition Commission has in the recent months imposed several restrictions on the sale of payment protection insurance and in summary they are as follows:

1. Insurers, banks, brokers and anyone who sells payment protection insurance now need to make sure that the cost of payment protection insurance is made clear in all their marketing material be it printed brochures or their website. If it is a lender or a mortgage broker selling the payment protection insurance, they also need to make it clear that the cover is optional and that the payment protection insurance can also be purchased from other providers.

2. The insurers and or brokers have to set up annual reviews and bring the cost of payment protection insurance to the attention of the policy holders. They also have the obligation to let their customers know that they can cancel the policies at the annual review date without any penalties.

There is a normal culture in the broking community that any new legislation or restriction that the regulator places on the businesses is heavily criticised. However this time around, there was no such drama. This goes to show how big the mis-selling problem with payment protection insurance was with the banks and some brokers who added the payment protection into the loans.
The single premium payment protection insurance is now history and also most lenders have made a conscious choice to stop selling payment protection insurance. The market has definitely shifted from lenders and mortgage or loan brokers to independent insurance brokers. The review made by the income protection task force recently made it clear that they will be promoting the fact that income protection (form of payment protection) is one of the most important protection policies people should be buying and that it is more crucial when compared to life insurance or critical illness cover.

We at Best Insurance believe that there are many who need payment protection as they cannot afford to be without a protection in place as people have heavily leveraged out and hence a good income protection insurance is a must in these uncertain times. The range of unemployment protection insurance and redundancy insurance helps people choose the ones that are most suitable to their individual requirements.

 

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