PPI Proposals 'Will Leave Car Buyers Vulnerable'

Car insurance customers who buy a new vehicle on finance will suffer if proposals by the Competition Commission are adopted, the Retail Motor Industry's National Franchised Dealers Association (NFDA) has claimed.

Plans to implement a 14-day cooling off period before dealers can sell car buyers payment protection insurance (PPI) will leave retailers and customers worse off, it stated. The proposals have been put forward in a bid to increase competition in the PPI market.

However, the director of NFDA, said after 14 days many customers would forget to follow up on PPI. She warned: "In the current economic climate, where many consumers are concerned about the possibility of redundancy, PPI is a crucial way of ensuring they are able ... to cover their loan payment."

Payment Protection Insurance, or PPI, is a policy which covers your monthly repayments in the event that you are unable to work due to accident, ill health or unemployment. It is usually taken out when applying for most types of finance and credit although policies can be bought separately from insurers and brokers. They add a lump sum onto the amount you’ve asked to borrow which means you pay an increased monthly amount.

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