BBA representative concerned over regulations
by Luke Whitmore, 3rd June 2011
A representative of the British Bankers' Association (BBA) has
expressed concerns that the new rules on PPI sales could mean
people do not take out the insurance even when it could be of use
to them.
Recent changes to the regulations concerning PPI, or Payment
Protection Insurance, mean that policies cannot be taken out for 14
days after a loan is agreed upon. This restriction is intended to
reduce the occurrence of PPI mis-selling, whereby a borrower finds
their loan bundled with expensive insurance coverage or has the
broker in question pressure them to take out a policy they may not
want or need.
But the assistant director of media at the BBA, Brian Capon, has
stated that now "there is the danger that people who stand to
benefit most from the cover will not take it out".
The new restrictions were instituted as a result of the systemic
mis-selling of PPI by financial institutions, after it came to
light that millions of customers had been sold loan insurance
policies which were not suitable or necessary for their needs.
Payment Protection Insurance is supposed to protect a borrower's
ability to repay their loan, by paying out in the event that they
should lose their primary source of income, through redundancy,
injury, illness or other similar occurrences.
But many people found that they had not been made aware of
exemptions in their policies which would have rendered them
incapable of ever successfully claiming on the insurance. Others
were misled by commission-hungry brokers, told that taking out PPI
made their loan more likely to be approved, or even had the
insurance added to their loan without agreeing to it.
However, Capon claimed that some consumers would be "leaving
themselves in a vulnerable position" if they neglected to take out
a PPI policy, and that the new regulations made this more
likely.
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