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Another PPI product will test the market

AutoProtect is the latest company to launch a payment protection insurance (PPI) product to be sold through dealers in competition with cover offered by high-street and direct lenders.

The company says this market presents dealers with a chance to sell PPIs and increase their profitability, but there are doubts about how many dealers want to sell these products.

AutoProtect quotes an OFT statistic from latest October that seven million PPI policies are sold each year, generating a premium turnover estimated at £5.4 billion.

The Financial Services Authority has laid down rules for the way PPI products are sold, and the way their cover is explained. The OFT has reprimanded a small number of dealers for the way they sold PPI policies, and says investigations are continuing.

Consumer organisations have criticised some lenders for methods used to influence buyers to add a PPI to a loan, saying independent policies can be cheaper.

More products from independent providers are likely.

Andrew Richards, AutoProtect chief executive, says: “Our PPI is a low-cost product, backed by a major insurer, providing reassurance to consumers. Utmost consideration was given to the FSA remit.”

Dealers have been criticised for their inability to sell finance products, and the level of demand for point-of-sale PPI sales is not yet clear.

In July, Paymentcare.co.uk said it was close to signing contracts to provide PPI policies to a number of dealer groups, but negotiations collapsed.

Shane Craig, managing director of Paymentcare.co.uk, says: “The FSA has acknowledged motor retailers have shown some of the industry’s biggest improvements in the way policies are sold and dealer principals should be proactive in arranging their own.”

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