- Lack of easily accessible information on PPI costs to be addressed by FSA
- Lenders reluctant to help consumers compare and choose on PPI
THE CONSPICUOUS absence of payment protection insurance (PPI) from most price comparison and switching websites is highlighted by the Financial Services Authority’s proposals to produce its own comparison tables for PPI*, according to independent PPI provider Paymentcare.co.uk.
Over the last couple of years these websites have proved to be a good friend to consumers by helping them find the best value for money across a wide range of services such as gas, broadband and current accounts.
But search for a comparison table on the cost of payment protection insurance for a personal loan or credit card and the message will be “no results found”.
“Whilst not condoning the high prices charged by High Street lenders for PPI, I believe there are commercial reasons why PPI is omitted from their range of services,” says Paymentcare.co.uk managing director Shane Craig.
“If borrowers could simply click on a table that showed the huge difference between their lender’s PPI and the independent alternative, they would be most likely to go with the most cost effective option – and that is unlikely to be from their lender.”
Whilst not going as far as giving users the facility to compare the costs of PPI from all providers, mainstream and independent, some comparison and switching sites have made it clear to their customers that there is an alternative and that they should make their own enquiries.
As part of its ongoing campaign to improve the way PPI is sold to consumers, the FSA has published proposals to develop comparison tables for all consumers thinking of taking out a mortgage, unsecured personal loan or credit card PPIpolicy.
Due for completion in March 2008, these tables will provide consumers with an unbiased, comprehensive picture of all the options available to them – not just the one their lender wants to sell them.
“This is another positive move for consumers by the FSA and a clear indication that borrowers are still not being treated fairly by some lenders when it comes to PPI,” says Craig.
Paymentcare.co.uk monthly paid policies are among the best value on the market and are straightforward for consumers to understand.
For example, a loan from a typical high street lender** of £15,000 over five years at a rate of 6.9% would cost £294.87 per month. Add on the lender’s own PPI for life, accident, sickness and unemployment cover and the figure shoots up to £378.31 – an extra eye-watering £83.44 per month or £5,006.40 in total over the term of the loan.
The equivalent level of cover with Paymentcare.co.uk would cost just £16.22***per month or £973.20 in total, making a saving of £4,033.20.
“If consumers can compare prices for electricity or the best mortgage deal or savings account, why can’t they do the same for PPI?” says Craig.
** Unqualified quotes obtained from Northern Rock, Alliance & Leicester and Halifax – July 2007
*** Monthly premium required to provide a monthly benefit of £294.87