BGN Entrepreneur

The curbs on the sale of payment protection insurance, which are proposed by the Competition Commission, cover debt repayments if a borrower cannot work because of accident, sickness or unemployment. As the payment protection is one of the last big   for banks such as Lloyds TSB, Barclays and HBOS, a huge slice of the profit is expected to be lost if the proposals are approved.
The policies are seen as threat to loan costs these days, as the lenders think that they have been widely mis-sold. Warning has been given by the lenders that the proposed crackdown would force them to further push up the rates on loans because they would no longer be able to subsidise deals with profits earned from the insurance.
To prevent the worst abuses, the Competition Commission wants lenders to be prevented from contacting a customer about the insurance within 14 days of a credit agreement being signed. It also requires single-premium policies outlawed, and advertising made clearer.

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