Lloyds stops selling payment protection insurance
Lloyds Banking Group has stopped offering payment protection insurance (PPI) products across all its brands and products.
This means that PPI policies will no longer be sold alongside its personal loans, credit cards and mortgages to any new customers of Lloyds TSB, Halifax, Bank of Scotland, Cheltenham & Gloucester and Black Horse.
PPI covers the repayments on financial products if the borrower is unable to make them due to accident, sickness, unemployment or death. The majority of these products are sold alongside unsecured or secured personal loans, credit card and mortgages.
This decision will not affect customers with existing PPI policies however, and Lloyds Banking Group has said it 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 Lloyds spokesperson 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 sale of PPI products has been under scrutiny in recent months after the Financial Services Authority decided changes need to be made to the way lenders sell it and how they deal with complaints about mis-selling. The sale of PPI is now being restricted by the FSA and the Competition Commission.
Peter Vicary-Smith, Which? chief executive, 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.”
Martin Lewis of the consumer website Moneysavingexpert said he was “jumping for joy” at the Lloyds decision.
A number of other banks are also currently reviewing their decision to sell the insurance. HSBC stopped selling PPI as a standalone product in 2007, and only offers it as part of a range of insurance covers available in its Life Choices cover.
Royal Bank of Scotland and NatWest only offer the cover with mortgages and loans of between £25,000 and £35,000, but this is under review, while Nationwide also only offers it with mortgages. Barclays is in the process of phasing out the sale of the cover alongside a number of its credit products while Santander stopped selling PPI alongside unsecured credit in 2009 and is continuing to review the sale of it alongside mortgages.
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