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Lloyds Banking Group stops selling payment protection insurance

By Dominic Welling dominic.welling@consumerchoices.co.uk

Lloyds Banking Group is to stop selling payment protection insurance (PPI) on all its loans, credit cards and mortgages.

Instead the bank will simply hand out generic literature on PPI to customers when they buy a product.

PPI has been widely missold for years, resulting in some massive fines by the money regulator.

Payment protection does, however, have its place as it can help people who fall ill or lose their jobs keep up with their financial obligations.

However, most PPI policies are sold alongside a loan or credit card and many consumers are unaware that they could shop around for the best price and a product suitable for their circumstances.

Lloyds said in a statement: “This decision will not affect customers with existing PPI policies. The Group will honour existing applications which are in progress until 31 July 2010 for personal loans and credit cards, and until 20 November 2010 for mortgages.

“The Group will continue to offer a broad range of income protection, critical illness and life insurance to help meet customers’ protection needs.”

Peter Vicary-Smith, chief executive at Which?, added: “Lloyds decision to stop selling PPI is 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.”

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