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Have regulators gone overboard regarding PPI changes?

After the announcement of substantial changes in the sale of payment protection insurance (PPI) a number of financial advisers have come forward to suggest the government may have gone overboard. However, when you consider that at one point Barclays bank was alleged to be making 70p profit from every one pound of PPI it sold, the industry would appear to have little basis for appeal.

In effect the government has only opened up the PPI market to competition, by barring the sale of payment protection insurance at point of sale of a credit card or loan for 7 days, which should in due course be advantageous to the consumer. PPI has been something of an embarrassment to the financial services industry in the UK with revelations that the vast majority of those acquiring PPI were very unlikely to ever use it. This has great similarities to the insurance sold with various "white goods" in the past where again the vast majority of insurance policies were not required.

There are a number of rumours and counter rumours with regards to possible changes in loan and credit card applications by various banks, as they look to make up the potential shortfall of losing the opportunity to sell PPI. As we have covered on the site on a number of occasions, each and every regulatory change in the financial sector seems in some way to find its way back to the consumer who is more often than not left to foot the bill.

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