What will happen now that the PPI market has been opened up?
While the recent government announcement that payment protection insurance cannot be sold for up to seven days after a loan or credit card agreement has been signed has been welcomed by consumer groups, there is concern about who will actually "pay" for this potential loss of business. As with the bank overdraft charge saga it always seems that the customer is made to endure higher charges in due course, no matter what the regulators say.
There are concerns that customers will eventually pay for the loss of PPI business for some financial institutions with higher loan and credit card arrangement fees and interest charges. The fact that the sale of PPI will be open to the mass market will see you around £4 billion of business spread amongst a much larger band of companies. The larger UK financial companies will see a significant drop in their PPI income which will have to be made up in other areas of the business.
In many ways the regulator has been playing a cat and mouse game with the financial sector for some time as charges are transferred and losses of income are regained in other areas of the business. The regulator is most definitely on the side of the consumer but how useful the changes to bank overdraft charges and PPI will be in the long-term remains to be seen.
Share this..
Related stories
Council tax set to rise to plug pension fund shortfall
It has been revealed via a Freedom of information request that 83 of the 87 local government pension schemes in operation in the UK were in deficit in 2007. When you consider that the financial situation has changed for the worse since 2007, we can only assume that the deficit problem has worsened over the last two years. So who will pay the price? The Liberal Democrat Shadow Work and Pensions...
Read MoreWhy Is There No Talk Of Tax Cuts?
As the economy lurches from a slow down into a full blown recession it would have been reasonable to expect talk of tax cuts and returning money to the UK population. However, tax cuts have never been further from the table with many even suggesting that the UK is braced for another round of tax increase. But does this make sense?
The truth is that the UK public purse is in such a...
Stronger focus urged to help rural poor
Calls are being made for greater help to be extended to poorer communities in rural areas, amid concerns that rural regions in developing countries are being neglected with regard to ongoing aid efforts.A new report from the National Audit Office (NAO) makes the point that rural poverty must be a key area of focus in tackling poverty if the Department for International Development (DFID) is to mee...
Read MoreHouse Price Falls Fastest For 17 Years
A report by the Nationwide has highlighted the fact that house prices are now falling at the fastest rate for over 17 years and the situation does not look as if it will improve in the short term. Prices slumped by 8.1% last year which knocked £15,000 off the average house price across the UK. The average house is now valued at under £170,000 for the first time in a long while. So where do we...
Read MoreCar Insurance “11pc cheaper than a Year ago”
New research has suggested that motorists are experiencing car insurance renewal prices that are 11pc lower than this time last year, as the insurance industry succumbs to increased competition between insurers. Many companies throughout 2012 have adopted the strategy of offering new customers reduced rates in the hope to secure their money, while hiking the renewal prices of their current custome...
Read More