Debt culture to blame for pushy selling of personal loan protection

Financial Services > Personal Loans > News

Thu, 06 Apr 2006

The culture of living on credit is partly responsible for banks seeming pushy when selling payment protection insurance (PPI), says a finance expert.

With consumers living off credit and being encouraged to chase low rate forms of financing, banks are forced to find some other way to make back some of the money, argues Shane Craig, the managing director of Payment Care.

He said the UK was a " debt laden society", constantly being encouraged to borrow .

"With zero per cent it's a case of switch it here, switch it there," he commented.

He explained that banks offering low APR on their various financial products had to find a way of profiting from other areas of financing, and therefore have started to encourage borrowers to take out PPI with personal loans or credit cards .

However, many consumers have complained that banks are too pushy when it comes to selling the personal loan insurance policy.

Over half the consumers questioned by a survey carried out by the website Moneyfacts said they felt their bank tried to push the insurance policy on them.

In fact the practice of selling payment protection plans is now the subject of an investigation by the Office of Fair Trading (OFT).

The OFT are to look into a complaint made by the Citzens Advice Bureau that consumers are paying too much for PPI and that unfair sales tactics are being used to encourage consumers to take out the policy.

Consumers do have the option to take out payment protection insurance on their credit card or personal loan from an independent provider who might be able to offer a better deal than their bank.

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