Many payment protection insurance providers have increased their prices over the past year despite the product being under investigation by the Office of Fair Trading.
Moneyfacts.co.uk surveyed the main PPI players and found that five have pushed their prices up by as much as £10 a month since June 2006.
On a £5000 loan over 36 months Direct Line, the worst culprit, charged £14.12 per month in June 2006 but now charges £24.50. This is an increase of £373.68 over 36 months.
Lloyds TSB put its prices up from £21.12 to £28.77 which equates to a rise of £275.40 over 36 months.
Moneyfacts.co.uk personal finance analyst Michelle Slade says: “With PPI currently under the OFT microscope and being seen as an ‘overpriced, inflexible’ product you may have thought lenders would be reluctant to rock the boat further. However, for many providers the price has continued to climb over the last year.“
Moneyfacts.co.uk found that the average cost of a PPI loan has not changed.
The most expensive product is £35 which could cost as much as £756 for the three year term but Slade warns it could rise even further because PPI is generally added to the amount borrowed and therefore accrues interest.
The FSA is due to publish a consultation paper this month proposing changes to rules on how PPI is sold.