Payment protection insurance providers are "rubbing salt into an already very deep wound" by upping product costs at a time when PPI is under the OFT microscope.
Research from money search engine Moneyfacts found four big-name providers, including Lloyds TSB and LV=, have all recently increased their PPI costs.
Based on a loan of £5,000 over 36 months, Moneyfacts says there have been monthly increases of at least £5, and as much as £10, which, over three years, can run into several hundreds of pounds.
Michelle Slade, personal finance analyst at Moneyfacts, says: “With PPI being seen as an ‘overpriced, inflexible’ product, you may have thought lenders would be reluctant to rock the boat further.
“However, for many providers, the price has continued to climb over the last year.”
IFAonline yesterday reported brokers are being urged to consider independent providers to help ensure they are adhering to the FSA’s policies on treating customers fairly, particularly following the regulator’s Insurance Conduct of Business (ICOB) review.
The ICOB review indicates customers purchasing PPI run a significant risk of signing up for poor value for money products.
Single premium loan PPI products have received the most criticism since the Office of Fair Trading investigation began in September 2005.
But Moneyfacts highlights the potential benefits of opting for independent providers.
Slade adds: “While it can not be disputed that insurance against, life, accident, illness or unemployment can prove invaluable in some circumstances, the downside is the cost, inflexibility and the sales process associated with loan PPI.
“The huge profit margins on PPI are illustrated further by the fact that independent providers can offer the same cover at a fraction of the price.”
The Moneyfacts research also found several providers have reduced their PPI prices, including RAC Financial Services and Norwich Union, while others (First Direct, Marks & Spencer Money) have remained the same.
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