Imagine a bank lending you money created out of nothing, charging interest for the loan, and then to top it all off sells you "payment protection insurance," feeding on your fear of not being able to repay the loan? Is this in your interest?
It's the great protection racket. Banks have been selling over-priced payment protection insurance often to people who will never even be able to claim on it, according to an alarming new report from Citizens Advice this week. The charity wants the Office of Fair Trading, the government's chief consumer watchdog, to investigate why the insurance can add £2,100 to the cost of repaying a £7,500 loan and yet as few as five in every 100 buyers ever makes a claim.
Citizens Advice said its study showed finance companies were continuing to mis-sell the insurance to cover repayments on personal loans, mortgages and credit cards. It said payment protection insurance was, in many cases, "more about providing an additional source of profit for the financial industry than about protecting consumers."
Simon Burgess, of insurance broker Burgesses, says he knows why the banks have got away with it for so long. "They continue to profiteer from selling this product and people are paying a heavy price…
Story linked here.
And in case you were thinking: Oh, but that's in England, not the US. Think again, again, again.