Banks recoup PPI losses from borrowers
by Luke Whitmore, 23rd May 2011
In the wake of the PPI mis-selling scandal, rates on personal
loans have hit their highest level in decades in order to cover the
risk of borrowers defaulting on their loans.
The financial information site Moneyfacts has reported that the
average rate on a loan of £5,000 is now 12.7 per cent, as compared
to five years ago when the average rate came out at 7.8 per
cent.
Analysts have suggested that the rate hike is due to the banks
no longer being able to shore up their finances through widespread
sales of Payment Protection Insurance, after a court case on
mis-selling of PPI policies was decided against them this
month.
Banks are facing a bill of billions after being assigned legal
responsibility to redress customers who were mis-sold PPI, and
while it is good news for those consumers who have been paying
through the nose for insurance policies they did not want or could
not make use of, there are fears that banks are set to increase
prices in other areas, both to cover the cost of the compensation
for PPI and to ensure profitability in the future.
There have already been obvious moves in this direction, with
suggestions that free current accounts could soon become a thing of
the past as banks begin to heavily push packaged bank accounts
which offer a variety of financial and banking services for a fee.
Interest rates on credit cards and mortgages have also skyrocketed
of late, with some analysts predicting that a number of banks may
soon only offer loans to borrowers who are already customers of
theirs in order to minimise risk.
The advice to consumers is to make sure to shop around in order
to ensure the best deal on a loan, with many supermarkets now
offering lower rates than the high street banks.
If you have been mis-sold PPI, it's time to claim a PPI refund - and we can help.
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