Lloyds Bank to start making an honest living (sort of)

[BankFodder]

MONEYSAVINGEXPERT.COM NEWS COMMENT

Monday, 26 July 2010

Lloyds Banking Group to stop selling Payment Protection Insurance

Consumer Revenge site MoneySavingExpert.com has just learned Lloyds Banking Group (including Halifax) has stopped selling Payment Protection Insurance on all its loans, credit cards and mortgages. Instead it will simply hand out a generic leaflet about PPI with such products.

When the site asked the bank about this, all the Lloyds spokesperson would confirm was...

"Lloyds Banking Group stopped selling PPI from Friday, 23 July across all brands. The group does not expect this move to have an impact on income and the group will continue to receive income from existing policies."

Martin Lewis, creator of MoneySavingExpert.com, comments:

"This is a quite astonishing move. This insurance, which has been scandalously missold for years leaving many consumers in misery, is estimated to be worth up to five billion pounds a year for the industry.

"Frankly we're jumping for joy at this news, and hope the other big banks follow suit. The product itself isn't bad, it can provide useful protection to people if they're sick or lose their jobs as it covers their repayments, but people should go to competitive standalone insurers rather than banks. That's because they sell it at four or five times over the odds, often without checking suitability, meaning many have been duped into paying a hidden £1,000+ extra on policies that are worthless for them.

"To all those who've got or had one of these policies - even on a now paid off loan - I'd urgently suggest you check it's suitable, we've had over 900,000 template letters for PPI reclaiming downloaded and countless millions paid back, you may be eligible for serious money."

How will Lloyds claw back all of the money they are making from PPI policies? They'll probably start by increasing their charges and being tougher about them too.

 

I think that Lloyds announcement indicates that they aren't really able to sell the product without substantial misselling. They have finally given way to pressure from very half-hearted regulatory authorites.

 

Of course, with their present rates of interest so disproportionately high, this was a pretty good time to abandon the PPI rip-off scheme anyway. Notice the word "duped" in Martin Lewis' press release.

[rebel11]

How many millions have they racked in? They will still be minted because

people haven't claimed it back.

[pompeyfaith]

Although this is good news, I feel they have not done this with the customers best intentions at heart.

 

The FSA and CC have already given there views on this product and made the selling of it very difficult indeed a ban was already in place and nearly all financial organisations had already withdraw it from literature and websites.

 

Lloyds had no choice but to take this step just a shame hey did not do it a lot sooner instead of wasting millions in putting up a fight and trying to justify its worth.

 

PF

[bornrich]

This is a brilliant result for consumers in the UK and completely proves that campaigning works.

 

However, the biggest challenge faced is the banks' attitude to their customers. How are they going to move away from treating us collectively like a profit centre and instead treat us as individuals with needs that must be responded to – and do it without losing face?

 

How is the present uncompetitive market ever going to deliver the momentum to achieve it?

 

The tide is slowly changing but when will we experience a sea change? A tipping point when massive and swift action floods the banking market?

 

As I said, a great result (especially as it's Lloyds TSB) and here's to many more in the near future.

 

Bornrich

[Major Player]

Lets be frank here, LLoyds have cancelled the sale of PPI for commercial reasons more than customer pressure.

 

Martin Lewis has done a fantastic job in opening up peoples eyes to the fact that they may have been taken advantage of over the purchase of unecessary PPI but this is not the reason for them pulling it. There have been many missold cases but the black and white of it is that with claims on PPI/ASU being the highest that they have ever been given the state of the country they can only see PPI being unprofitable due to the increased sales process regulation and the increased likelyhood of a claim being made - effectively its more expensive to sell with more of a chance of a claim being made. The misselling aspect is big but in reality the profits that were made from those products have been made and taken already, the losses are made when the claims are paid back (i.e. Now) and we know who has to foot the bill for this - us!

 

Its not necessarily a good thing as with a major provider out of the marketplace, the likelyhood of increased premiums for those who legitimately would benefit from this type of policy will increase and availability will decrease (As per personal lending impact at present).

[caro]

They appear to have forgotten to mention what they're going to do about re-imbursing all the people who have been mis-sold policies. I wonder why.