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PPI ban 'could have negative impact on consumers'
Posted by Emily Jones
Although the move has been implemented in a bid to protect consumers, the proposed prohibition of point-of-sale payment protection insurance (PPI) could have a detrimental impact on people's finances.
This is according to David Kuo, editor of the Motley Fool, who noted that banks may switch their revenue streams elsewhere by charging higher loan rates for everyone.
Recently, the Competition Commission declared a provisional ban on PPI selling, which is intended as a means of preventing financial service providers from mis-selling the product to consumers.
Those behind the decision hope it will lead to greater competition and cheaper rates.
Mr Kuo commented: "As far as banks and lenders are concerned, the PPI part of any loan deals was really the part that made them money."
The expert went on to claim that if the prohibition goes ahead, some consumers may be refused loans, while those who succeed in getting credit could have to pay a higher rate of interest.
19/05/2010 14:50
News category: Consumer