Lloyds scraps PPI sales
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Lloyds Banking Group has stopped selling payment protection insurance across all five of its brands.
A report on MoneySavingExpert.com reveals that Lloyds stopped selling PPI through its Lloyds TSB, Halifax, Bank of Scotland, Cheltenham & Gloucester and Black Horse brands with effect from July 23.
Lloyds is instead offering customers a leaflet on PPI from the British Bankers’ Association.
The bank has promised not to raise loan and credit card rates to replace the income it would have received from PPI sales.
Existing customers who have taken out PPI policies with Lloyds will be unaffected.
The bank will honour PPI applications on loans and credit cards until July 31, and on mortgages until November 20 but is no longer receiving new applications.
MoneySavingExpert.com creator Martin Lewis says: “This is a quite astonishing move. This insurance, which has been scandalously mis-sold for years leaving many consumers in misery, is estimated to be worth up to £5bn a year for the industry.
“We hope the other big banks follow suit.”
A spokeswoman from Lloyds says: “Lloyds Banking Group has withdrawn its PPI products across all brands and channels. 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.
“Across all channels, on a phased basis from July 23 2010, policies will no longer be sold to new customers alongside Lloyds TSB, Halifax, Bank of Scotland, C&G and Black Horse personal loans, credit cards and mortgages.
“The group will continue to offer a broad range of income protection, critical illness and life insurance to help meet customers’ protection needs.”
The Competition Commission ruled in May that it would continue with its plans to ban point-of-sale PPI.
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Readers' comments (11)
Derek Hallas | 27 Jul 2010 9:09 am
Another rediculous, uncaring and irresponsible move by another bank to pull away from valuable protection for the consumer in the interests of their own profitability and to reduce complaints. So the new Lloyds slogan is 'Borrow money from us, but then your on your own mate!' Surely the goverment must intervene to say that if you want to lend loans to people then you must provide your customers with the option for protection if things take a turn for the worst. If these policies were sold correctly in the first place then surely this wouldn't have happened. I am absolutely disgusted to be honest.
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Anonymous | 27 Jul 2010 9:11 am
I am puzzled to see how this can be good for the consumer - ok, we know that this can be missold, however, what about the genuine cases which give the client valuable protection, if the client doesn't purchase at point of sale, they are highly unlikely to go and seek to purchase elsewhere, leaving them underinsured. Public Education regarding the options available to them is far better.
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Sam Jones | 27 Jul 2010 9:23 am
How short sighted these so called consumer champions like Martin Lewis are. The fewer the suppliers of these products, the less the competition, the less the choice and the higher the cost of cover will go. It's all very well commenting on these 'mis-sold products' but what of the millions of people who have benefitted from claiming on them in times of recession? Unemployment claims have never been so high. It's time we stopped being a nanny state which assumes consumers have no responsibility for the purchase decisions they make - whatever happened to caveat emptor? The consequence of the banks abandoning PPI is that it will be harder for Joe public to obtain loans, as lenders will have to factor in the much higher risk of future arrears due to the lack of insurance for these risks. Many of the banks also underwrite or reinsure PPI, so what happens when they stop manufacturing? There won't be any PPI products to sell! The world has gone mad.
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Anonymous | 27 Jul 2010 10:03 am
As a former employee I witnessed how this was mis-sold and how staff were managed out if they did not achieve targets. This is up there with endowments! If sold correctly fine but I would say 50% wasn't in the early 90's from my experience.
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Mark D | 27 Jul 2010 10:20 am
Before you bemoan their passing, look at the reality, and get your facts right. This was typically single premium PPI increasing loan amounts by about 25%. Millions of policies were sold, but proportionately very few claims were made. Not hard to understand if you read the terms and conditions and reflect on the probabilities. Competition was irrelevant because the product was sold as a package with the loan.
This stuff can be valuable - though not with personal loans, generally. There's an opportunity for good advisers to sell it when appropriate; how many are?
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Anonymous | 27 Jul 2010 10:22 am
I have been a practising IFA for 18 years and never, ever, sold a PPI. The number of exclusions and the cost v benefit of these policies has always been abysmal - even the best of them, let alone most of the rubbish sold by the banks, represent very poor value for money. The profit margins and commissions have been huge until now - 70% or more in commission. The only reason Lloyds are pulling out is the fact that if they are forced to make the policies competitively and fairly priced in the future, the margins will shrink massively. If they could continue to rip off customers they would !
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Anonymous | 27 Jul 2010 10:56 am
Lloyds have scrapped it because they know they stand less chance of selling their policies post interview.
I spent almost 10 years working for C&G and the cover was expensive but comprehensive.
From memory in addition to covering the mortgage payments, it also gave clients £3 for every £1000 of mortgage towards living costs.
If it's been missold in the last 5 years or so, well that's Lloyds' fault for introducing a sales culture which eroded adviser confidence.
Lloyds killed C&G. They got given the ball and dropped it like Robert Green.
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Julian Stevens | 27 Jul 2010 11:33 am
The next thing they should [be made to] stop flogging is investment bonds (or, come to that, any sort of investment product) without specific, signed CAR. Go on, FSA ~ what are you waiting for?
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shaks | 27 Jul 2010 12:05 pm
Brokers should see this as a opportunity to properly advise clients on protecting their incomes. No money wasted on useless PPI means moe money available on value for money PHI and ASU etc. I can't beleive so many brokers out there are blind to opportunity. The problem is too many advisers have forgotten that they are sales people (I would have said salesmen but we live in the age of politial correctness) and have got too wrapped up in being professional advisers with qualifications coming out of our backsides. Go do some selling, its much more fun.
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Sam Jones | 27 Jul 2010 1:01 pm
In response to those slamming the Lloyds decision on the grounds of making less profit, I would ask - are you a taxpayer? If the answer is yes, then you should be glad that the bank is interested in protecting profits as it's part owned by us as taxpayers! Wise up folks, banks are there to make profit like any other business. I don;t see anyone criticising clothes shops for making profit out of something essential for keeping vulnerable people warm, or food shops for making a profit out of the fact that we have to eat - that's business - why should banks be any different?
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