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Protection for unsecured loans needed

Protection for unsecured loans needed

Category: Loans

Updated: 16/12/2008
First Published: 12/12/2008

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 It is now over 6 months old so the content may be out of date.

Unsecured loans customers need access to insurance policies in the current economic climate, it has been suggested.

According to the Association of Finance Brokers (AFB), payment protection insurance (PPI) is badly needed due to the vulnerability of many consumers.

The body has called for the Competition Commission (CC) to ensure single premium PPI remains available, after CC recommendations including a ban on such cover were made.

Single premium policies add the cost onto the loan itself, meaning consumers pay greater interest.

Other proposals made by the CC included banning providers from offering PPI within 14 days of a loan agreement.

Robert Sinclair, director of the AFB, remarked: "We were pleased to see confirmation that the prohibition of the active sale of PPI by a customer within 14 days of the sale of credit had not been applied to intermediaries and only distributors."

The CC's recommendations were recently welcomed by Which?, with the consumer campaign group noting that those taking out unsecured loans would be less likely to be pressured into taking policies.

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