Lenders have a stranglehold on the PPI market

According to the Office of Fair Trading (OFT) standalone payment protection insurance providers are responsible for around just 6% of PPI sales. The rest of the policies are still sold alongside mortgages.

This means that probably all of the 94% of people who take out a PPI product such as mortgage payment protection insurance (MPPI) or loan protection insurance are paying more than they have to.

Even the OFT is concerned as they have started to question the level of competition in the market and the stranglehold that lenders retain over point-of-sale.

The OFT states the point-of-sale advantage combined with a customers' apathy to shop around for insurance means too many customers do not get the right products at the best prices.

Shopping around for PPI insurance means that consumers can save literally hundreds of pounds in premium repayments – thousands over the term of a mortgage.

However when it comes to MPPI, many intermediaries only sell one supplier’s PPI arrangements. This means that despite their customers all have varying needs, they will all be offered the same policy from the same provider.

However, with the possibility ahead that the Competition Commission (CC) will be investigating the market and with the FSA already showing its intention to see that customers are treated fairly, hopefully prices will start to come down as competition among the providers heats up.

In the meantime, consumers looking for PPI to cover their loan, credit card or mortgage are urged to shop around for the best deal. Independent provider BritishInsurance.com provides low cost standalone policies, up to 80% cheaper than their competitors!