Nice Loans.co.uk > News > Loan Protection
Loan Payment Protection schemes under review
The topic of loan repayments being covered insurance schemes, called Payment Protection Insurance or PPI, has been under discussion in the finance industry for a while now and the FSA is due to announce some findings that will shed light on the future of this type of insurance.
The insurance has been heavily promoted in the past by lenders, who often incentivise brokers to include it with certain loan agreements. The insurance is designed to cover monthly loan repayments in the event that the borrower is unable to keep to a repayment schedule due to illness or loss of employment.
The primary flavour of this insurance which as received the most attention is referred to as "single premium", where the borrower pays a single up front fee to fund the period of insurance cover - which can be a 5 year duration typically. The premium is often added to the loan, but it is the value of the cover offered that is under review.
Some argue that borrowers needing this type of cover would be better to shop around rather than take the policy offered by the lender.
Industry observers have noticed an increase in compliants from so-called claims handlers, agencies who make their money by issuing claims on behalf of borrowers. The reason for this increase in indirect compliants is thought to be related to the fact that these agencies can no longer work on cases trying to reclaim bank charges, as this area has been put on hold now while a central decision is reached.
Copyright © 2007 Nice Loans - The Cheap Loans Provider
