News Categories

• Banking
• Breakdown Cover
• Car Insurance
• Credit Cards
• Home Insurance
• Insurance
• Life Insurance
• Loans
• Money
• Mortgages
• Pensions
• Pet Insurance
• Travel Insurance

News Archive

• February 2012
• January 2012
• December 2011
• November 2011
• October 2011
• September 2011
• August 2011
• July 2011
• June 2011
• May 2011
• April 2011
• March 2011

Newsletter

PPI point-of-sale ban 'could hurt borrowers'

By Sarah Engle, Tue 18 May 2010 - Published in Loans

The planned ban on point-of-sale payment protection insurance (PPI) could be bad for consumers, according to an expert.

Last week, the Competition Commission provisionally decided to ban offering the products at point-of-sale, except for retail PPI, in an attempt to prevent the cover from being mis-sold.

However, Motley Fool director David Kuo claimed that financial services providers will start to increase the cost of their other products to make up for the revenue which is lost through the new PPI rules.

"There are ultimately no free lunches. Whereas previously, banks were able to make some money with the insurance part of the loan, in future it's going to be much more difficult for them to do that," he explained.

Mr Kuo added that the easiest way for banks to recoup their lost revenue is for them to increase the interest rates which they apply to products such as personal loans.

Recent research from Defaqto found that the financial services industry could face a compensation bill of between £700 million and £1.2 billion from consumers who have complained about being mis-sold PPI.