Loan brokers are no longer allowed to automatically bundle payment protection insurance into loan plans, specifically when the application is made online.
The UK’s financial watchdog (the FSA) has recently announced that brokers will be prevented from gearing their online marketing materials to presume that consumers will automatically require PPI. From now on, consumers will have to physically request the product before brokers can quote for it.
For those who are not familiar with the product, PPI or payment protection insurance is a specific type of cover, which protects the applicant from certain incidents that would prevent loan payments from being made. Selling this type of insurance can prove to be extremely lucrative for the broker and can also be an expensive addition to the loan, for the consumer.
Consumer groups are overjoyed with the news, stating that the ruling is a victory for loan shoppers and will further ensure that individuals are not duped into signing for products they neither want nor need.
