UK Money News
6th June 2008
PPI reform 'could fuel rise in loan repayment rates'
The reform of payment protection insurance (PPI) could result in higher loan repayment rates, a price comparison site has warned.
Yesterday, the Competition Commission published a series of proposals which are intended to reform the sale of PPI and increase competition in the sector.
Responding to developments, Simeon Linstead, head of personal finance at uSwitch.com, said the move was a welcome one given the fact that many are overpaying for the cover, there could be worrying repercussions for rates charged on loans.
He commented: "While we support the shake-up of the PPI market, we still have concerns over the knock-on effect it could have on loan APRs.
"The high cost of PPI charged by loan providers is clearly subsidising the low loan rates on offer. The threat of a clampdown on PPI policies will result in a steady increase to interest rates."
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