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PPI removed from financial sector as of today

Payment Protection Insurance (PPI), the controversial insurance which has proved very lucrative for many financial institutions throughout the UK is today banned from sale in the country. The Financial Services Authority (FSA) recently acted upon the advice of a prominent report into PPI and the problems related to this particular investment vehicle.

In essence, the vast majority of mortgages, loans and other credit facilities were offered with PPI included with many consumers unaware they could actually shop around for better deals. While there has been particular concern regarding the level of cover expected and the level of cover delivered in practice, it is the fact that these one premium insurance policies were added to credit arrangements and incurred interest charges on an ongoing basis that is also of concern. Many consumers were unaware they were paying interest on their insurance premium, which in many cases added a significant amount to their loan.

While officially PPI should not be available from today there are concerns that major players in the UK financial sector will fight the move by the FSA and try to at least delay the death of PPI. It will be interesting to see how the FSA reacts should leading financial institutions look to overturn the move and also how consumers will react now they are fully aware of the facts.

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