Challenges Undermining the Success of Payment Protection Insurance in the UK

Essay from the year 2018 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1.4, Egerton University, language: English, abstract: The main objective of this report is to understand the concept of PPI, explore the process lenders have adopted over the last 20 years in providing customers with PPI, and the controversy which evolved in the UK regarding the provision of PPI from a consumer, regulation and retail perspectives.
Payment Protection Insurance (PPI) is a form of payment to customers that acts as a cover for the monthly repayments of loans owned to them by financial institutions such as the banks and insurance firms in situations when the customer becomes unemployed, falls sick or dies or even in case of an accident. Over the years, PPI has attracted increasing debate especially in the UK market following various concerns such as miss-sold products to customers who took loans. This concern led to some of the financial institutions in UK including HSBC to stop the progress of selling PPI in most of its branches in 2007, including personal loan protection plan, small business loan protection, cardholder repayment loan, mortgage repayment protection, and flexiloan repayment protection (Financial Ombudsman Service. 2011).