IVA could help with PPI debt

28/07/2010

IVA could help with PPI debt

People borrowing money could soon be spared the extra problems caused by payment protection schemes, that in the past have often led to a need for an IVA or a Debt Management Plan.

It comes as the Lloyds Banking Group has announced that it is withdrawing the sale of all Payment Protection Insurance (PPI) products across its entire range of brands, which include Halifax and the Bank of Scotland.

PPI covers a borrower against not being able to make repayments due to accident, sickness, unemployment or death and the vast majority of the insurance policies are sold alongside secured or unsecured lending such as personal loans, credit cards or mortgages.

The sale of PPI products has come under increasing scrutiny after more than five years of complaints by consumer groups, as well as investigations from a wide range of agencies including the Office of Fair Trading, the FSA and the Competition Commission.

Many experts have also questioned whether PPI provided a good deal for customers.

Martin Lewis from consumer website moneysavingexpert.com claimed to be "jumping for joy" over the decision saying that "This insurance, which has been scandalously mis-sold for years leaving many consumers in misery, is estimated to be worth up to £5bn a year for the industry,"

"It can provide useful protection to people if they are 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."

Peter Vicary-Smith of Which? also said that Lloyds decision to stop selling PPI was a huge victory for consumers.

"Hopefully other banks will follow suit and we'll finally see the back of this poor protection product."

"Now it's the beginning of the end for PPI, banks need to get back to the drawing board and offer their customers insurance products that actually protect them when they need it."

If you've taken out a large amount of unsecured debt through a personal loan or on credit or store cards then ClearStart can help whether you have also taken out PPI or not.

With our range of Debt Solutions, including options such as an IVA or a Debt Management Plan, we can help you leave debt, and the expensive options that come with it, behind for good. ADNFCR-3106-ID-19910750-ADNFCR