As the Competition Commission announces its provisional decision on remedies into the PPI market, Peter Vicary-Smith of Which? says: “This is a huge victory for consumers who have often felt pressured into buying expensive and inadequate PPI products. The Competition Commission has listened to the consumer voice and has taken decisive action. Single premiums trap people into poor value products that are difficult to get out of, but by staggering the payments, consumers will have more control. This sounds the death knell for shoddy protection and is a wake up call to the industry to develop useful products that consumers actually need."
PPI only pays out for a limited amount of time, usually 12 months, although some policies offer a 24-month pay-out period.
Credit and store card PPI often covers only the minimum amount that must be paid each month.
When sold alongside loans or finance agreements, PPI is currently sold as a single premium policy, which means a lump sum covering the cost of the insurance is added to the amount you have borrowed, so you end up paying interest on both the insurance premium and the loan.
PPI policies last for just five years, so if your loan or finance agreement is for longer than this, you will still be paying interest on a policy that has long since expired.
Income protection insurance: News update: November 2008