Financial Services Authority put a stop to loan insurance policies

Lenders have been instructed to stop offering their customers single premium payment protection insurance (PPI) when they choose to take out loans with them, reports the Press Association.

The Financial Services Authority (FSA) has ordered banks and other lenders to halt the practice as soon as possible. Following an unfavourable report on the subject conducted by the Competition Commission, the body said it would be banning PPI as of October next year.

However the FSA asked for the ban to be implemented as early as February 2009 and has now urged all lenders to halt PPI promptly due to concerns over quality of service. An FSA spokesman said: “No firms will be selling single premium PPI on unsecured personal loans following FSA intervention and action with the industry.”

PPI is designed to cover those who have taken out a loan but find that they are unable to work as a result of redundancy or illness .

Related Articles