Investigations Of Mis-Selling Life Cover And Payment Protection Policies Is Underway
Summary
Some of the ways in which the business is tackling the mis-selling of life insurance. The difficultieslinked to payment protection policies are emphasized.
The mis-selling of life insurance policies by a considerable amount of mortgage providers has to be attended todealt with|tackled} by the Government. Steps have been taken by the DTI, who have practically completed their enquiriesinto the tie in of home and contents insurance with a mortgage. A press releasebarring the practice is Mr Gregcontinues by that while lenders may not insist on customers taking out life insurance , they can be convinced that they do not have a choice, through the provider being ambiguous with the truth.
60 per cent of life cover is sold by mortgagelenders, although it can be bought through independent advisers, direct providers or via the internet.
Then again a Department of Trade and Industry spokesman has said that their investigation continues into a large range of insurance lock ins. A lender who met Edward Milibrand has said that life insurance has been given a fleeting look, while more emphasis has been centred on home and contents.
The problem with consumers being forced to buy noncompetitive life cover and home and contents insurance policies is equally significant for both products.
The concerns are even more serious with PPI. Around half of all consumers who have been influenced into taking out a PPI may have been provided with the wrong type of insurance. In addition the the greater part of people who bought one of these suspect insurances expect far more than they would in truth be given if they were unable to pay their bills.
A wide-ranging study has brought to light that about 26% of people believe that they will be paid a monthly wage from their PPI policy, not understanding that the insurance would only cover their debts.
A further twenty per cent said they thought the insurance would cover them if they could no longer meet their repayment obligations for any reason, and six per cent said they believed tha| their medical expenses would be paid if they fell ill.
Many people thought the insurance would keep going indefinitely to meet their debt repayments, others thought their policy would cover breakdowns and living expenses.
Annual sales of Payment Protection Insurance policies are said to generate premiums of around five billion four hundred thousand pounds for the insurance business. However anincredible £4bn of this is said to be sheer profit. Studies suggest that some banks can charge up to 600% more than others for similar.
The Office of Fair Trading is examining the sale of PPI following objections from Citizens Advice and the National Consumer Council. It recently highlighted concerns that banks are attracting customers by advertising seemingly cheap loans and then hammering them with massive additional costs by selling pricey PPIas part of the deal.
As a result, a loan which may appear to give good value can end up being far more costly.
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