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Action to be taken over insurance sales for unsecured loans

Action to be taken over insurance sales for unsecured loans

Category: Loans

Updated: 31/10/2008
First Published: 03/10/2008

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Financial Services Authority (FSA) has raised concerns over the sale of insurance alongside unsecured loans.

According to the watchdog, there will be greater regulation following findings of its own investigation.

Mystery shoppers acting on behalf of the FSA were found not to have had policies properly explained to them, with failings including the fact that many were not informed of the interest that would be charged because the cost was added to the unsecured loan.

The body advised that banks may "wish to consider" suspension of sales alongside unsecured loans while it contemplates what action should be taken.

"We will intervene to ensure consumers are protected and are considering what regulatory powers are the most appropriate to deliver fair outcomes," said managing director of the FSA's retail markets Jon Pain.

Payment Protection Insurance is often offered as a means to ensure repayments are kept up in the event that a borrower is unable to work.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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