New PPI rules to come into play
Changes should see an end to skulduggery
by Neil Godbold, 27th September 2011
In the light of the recent PPI scandal, new measures are being introduced to ensure that the financial product is from now only sold in a transparent and deceit-free manner.
From the 1st of October, it will be compulsory for banks and other lenders to provide adequate information on the product regarding its cost, and to make it unequivocally clear that it does not have to be taken out.
They will also be obliged to send customers a yearly report detailing the costs and giving a reminder that cancellation is possible.
Ben Heffer, Insight Analyst for Life and Protection at independent financial research company Defaqto, said: "These changes represent another key step in addressing the well documented problems in the PPI market.
"Critically, a line needs to be drawn under PPI to restore consumer confidence in protection products as a whole - and ensuring transparency in this market for consumers is a big step towards this.
"These measures will remind consumers of the need to review what cover they have and, if necessary, to shop around for an alternative policy that may more fully meet their needs. In addition, they will regularly prompt consumers to assess their protection needs more generally.
"Crucially, when comparing protection products people need to focus on the features and benefits that different policies offer, rather than price, to ensure they arrange cover that matches their requirements."
The reputation of the banks, as well as that of PPI itself is in need of serious rebuilding after the scandal which has rocked the financial world. At a huge cost to the bank, thousands upon thousands of consumer have reclaimed large sums of compensation after discovering that PPI had been mis-sold to them.
It is hoped that the new measures will keep the banks' greed in check and also restore the confidence of consumers taking out loans.