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Finance: Lenders improve PPIs for buyers

Finance companies were changing their products before the Competition Commission last month published its damning report about payment protection insurance (PPI).

One proposal is banning PPIs at point of sale.

The Finance & Leasing Association (FLA) surveyed members in the spring, and found 80% had made at least one improvement. They also said they paid out on the same proportion of claims.

Around half said they had extended PPI cover by reducing waiting periods or paying benefits for longer, and reducing or relaxing exclusion clauses.

Around one in three FLA companies had lowered PPI prices or increased cover options (such as unbundling accident, sickness and unemployment).

About a quarter had changed the way they calculated refunds so customers received a higher amount, or removed or loosened pre-existing exclusions.

These measures go some way to answering the criticism levelled by the Competition Commission.

The FLA this week held a PPI conference in London to outline the commission’s findings and discuss its suggested remedies.

FLA director general Stephen Sklaroff said: “It is vital people continue to be able to protect themselves against changes in personal circumstances when taking out a loan.

“In setting out a menu of alternative options for further change, the commission has recognised that some of them risk adversely affecting consumers. Nothing should be done that impairs PPIs variety, uptake or availability.”

Richard Bostock, FLA senior policy adviser, said the market and economic circumstances had changed considerably since the commission started its investigation.

“PPI provides a vital safety net for borrowers.” he said.

“We agree with the commission’s objective of ensuring customers benefit from a transparent market and have information to make sensible lending decisions. Banning point-of-sale PPIs would leave some borrowers worse off.”

  • Fiona Hoyle has joined the FLA as head of consumer finance and anti-fraud from the Council of Property Search Organisations. She will lead the response to the PPI report.
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