Lloyds stops selling payment protection insurance policies

(Update) Consumer groups claim victory after Lloyds bank announces controversial loan protection policies will no longer be sold to Lloyds TSB, Halifax, Bank of Scotland, Cheltenham & Gloucester and Black Horse customers.

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by Victoria Bischoff on Jul 27, 2010 at 09:26

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(Update) Consumer groups claim victory after Lloyds bank announces controversial loan protection policies will no longer be sold to Lloyds TSB, Halifax, Bank of Scotland, Cheltenham & Gloucester and Black Horse customers.

Lloyds has withdrawn its payment protection insurance (PPI) products across all brands and channels.

The policies have stopped being sold to new customers alongside Lloyds TSB, Halifax, Bank of Scotland, Cheltenham & Gloucester and Black Horse personal loans, credit cards and mortgages.

This decision will not affect customers with existing PPI policies however, and the group will honour existing applications which are in progress until 31 July 2010 for personal loans and credit cards, and until 20 November 2010 for mortgages.

A spokesperson for Lloyds said: ‘This move reflects the uncertainty around the regulation of PPI sales and processes. The Group believes further changes in regulation will make it uneconomic to continue to offer these products in their current form’.

‘The group does not expect this move to have a material impact on its income,’ he added.

Customers will instead be given a generic pamphlet about PPI from the British Banking Association (BBA).

Peter Vicary-Smith, chief executive of Which?, said: ‘Lloyds decision to stop selling PPI is a huge victory for consumers. Hopefully other banks will follow suit and we’ll finally see the back of this poor protection product’.

‘Now it’s the beginning of the end for PPI, banks need to get back to the drawing board and offer their customers insurance products that actually protect them when they need it,’ he added.

Barclays, Halifax and Nationwide have also said they are in the process of phasing out PPI products.

PPI mis-selling

PPI, which is meant to cover your loan repayments should you become unemployed, has been big news in recent years after the FSA received complaints about widespread mis-selling of the policies.

The Financial Services Authority and the Competition Commission have since said changes need to be made to how lenders sell PPI and deal with complaints about mis-selling.

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6 comments so far. Why not have your say?

Good profits from PPI were used by banks to subsidise personal loan interest rates. Not only did PPI generate income it also reduced bad debts.

Without PPI, the interest rates offered by banks on personal loans will rise significantly.

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So, David, what are you saying? That the banks should continue selling an overpriced product, which in most cases fails to do what it says on the packet, to the poor and less educatedpeople who do not understand that or that it produces an 80% profit for the banks, merely so that loans to the financially literate can be cheaper?

This move is long overdue and will lead, along with the reductions in the level of penalty charges by the banks, to more transparent pricing.

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If the loan rates go up, will I get a better rate of interest on my savings? Somehow I think not.

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PPI was wrongly sold to many, many people, and even those who thought about it and asked for it were often sold a policy they could never claim on.

That is clearly immoral let alone anything else you may want to call it.

Everyone should check their policy and demand a refund. Only don't use a claims manager, do it yourself.

www.creditcardaudit.co.uk is going live soon to allow people to check for themselves if they were wrongly sold PPI and how to get it back.

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There has been such widespread mis-selling of PPI, hopefully this development and articles such as this will raise awareness among consumers who have been mis-sold PPI - many of whom were not even aware that they had PPI in the first place.

There are a number of resources available online to help people claim back PPI themselves such as http://www.reclaimppi.co.uk

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Jonathan

Aug 01, 2010 at 11:44

With all the current cuts going on I'm not surprised they are withdrawing them as they would almost certainly make a loss.

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