Banks try to take on PPI ban
A proposed ban on the sale of payment protection insurance (PPI) alongside loans is being challenged by the banks.
After an investigation in the sale of PPI by the Competition Commission (CC) - which found a lack of competition in the market meant consumers were paying over the odds for cover - tight new regulations were announced.
Lenders were stopped from selling single premium policies, which stopped consumers changing providers as they would for car or home insurance, and also selling PPI at the same time as a loan.
The CC suggested a cooling off period before customers could be approached by a lender - so allowing other independent providers an equal chance of offering products.
Barclays, however, has demanded an appeal to challenge the point-of-sale ban - due to occur in September.
Barclays claims the ban on point-of-sale is detrimental to customers - believing without the option to purchase PPI with a loan many people will not take up the protection - and the CC did not provide sufficient evidence to back up its position.
Lloyds Banking has also now backed the appeal.
Peter Vicary-Smith, Which? chief executive, said: "It's outrageous that a taxpayer-backed bank is challenging the Competition Commission for the right to sell a rip-off product to the very taxpayers who bailed it out.
"Barclays and Lloyds should focus their energies on developing decent products that offer genuine, affordable protection."
He added: "PPI has been dissected and discredited through numerous investigations and FSA fines and the Financial Ombudsman continues to uphold the majority of complaints in favour of the customer.
"We can't understand why Barclays and Lloyds seem intent on swimming against the tide."
PPI has long been shrouded in controversy - with misselling of policies to those unaware it was optional or people unable to make claims dragging the reputation of the insurance through the mud.
The Financial Ombudsman Service reports an almost threefold rise in PPI complaints in the last year to around 30,000 - now accounting for a quarter of all financial complaints.
Only five per cent of complaints are from people not being able to claim having lost a job or becoming ill. The rest are from consumers concerned about how they were sold policies.
An FOS spokesperson said the levels of complaints show little sign of abating and the ombudsman is worryingly upholding a lot of cases.
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