View more on these topics

Turning the PPI ban to your advantage

Payment protection insurance has made the headlines once more following the Competition Commission’s decision to ban point of sale payment protection insurance and sale of single-premium policies.

Some have hailed the decision as a way of reviving confidence in the IFA sector but others are worried the CC has gone too far.

Unleash Advice Partnership IFA Adrian Kidd says: “I love the idea as I think it will stop unscrupulous brokers saying ‘you need insurance to get the loan’, when the insurance can add £5,000 to the total cost.”

Likewise, Highclere Financial Services partner Alan Lakey says this is welcome news because PPI plans are “overpriced, oversold, overstated and generally quite inadequate given that cheaper and more effective plans are available”.

For Pioneer chief executive Andy Chapman the news brings with it the prospect of more income protection sales.

Chapman says: “Rather than a negative, I’d like to think this is an opportunity for intermediaries and providers to boost IP sales, in turn offering more protection to many more of the UK population.

“Although there is a danger that we suffer from the negative association to the PPI arena, it is within our control to communicate the positive messages we do have. For example, I believe that we have a great tale to tell on claims, one that has the potential to reassure and convince customers, so let’s be positive about telling it.”

However, Lifesearch policy adviser Matt Morris says while the CC is right to recognise that the “status quo is indefensible”, the danger is that banning point of sale PPI could result in fewer consumers taking out any protection whatsoever.

He says: “They need to look at a possible middle ground in which bank distribution is maintained. We don’t want to see this ban leaving people unprotected, what we want is for banks to be able to sell protection. With that, goes the necessity to tell consumers about the limitations of that product and how the alternatives compare. This would end the dodgy mis-selling practices which are at the heart of the problem.

“In short it is good that the CC is taking action, but we would have preferred a different approach, as outlined above.”

The Income Protection Task Force co-chairman Peter Le Beau says now is the time for the industry to present a “non-toxic” replacement to cover those unprotected loans.
He says: “It doesn’t require much foresight to anticipate that this announcement could be a mortal blow to PPI sales. While some loans may be unprotected, the industry needs to grasp the nettle and present an alternative, simple and non-toxic form of income replacement which will do a much more comprehensive job than PPI and at a lower cost and in a more ethical way. It will be a missed opportunity if we don’t find a better way to help people.”


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm