It does allow you to read the small print. The manager who first offered me this got a shock when I did read it and pointed out that I would pay for a four year loan, get it for three years and cover for just one of those years. Not much of a bargain. I never borrowed more than I could repay from my own savings. Nowadays I do not borrow any more, too expensive!
No there should not be a ban. People do not seem to be savvy about these sort of things and tend to sign contracts without reading them. I would ban the presumed sale. For example ticking the box if you don't want it. Other than that, leave it as it is.
Whilst I wouldn't dispute there have been problems with PPI sold at the point of sale in the past, banning it is not the way to tackle the problem. Many fewer people will take the initiative and shop around for cover, so the consequence will undoubtedly be that those most at risk who ought to have bought it won't. No-one knows when accident, sickness & unemployment make strike, so just thinking it won't happen to them is no solution. Whilst people might get their wages/salary paid for short term sickness, this is certainly not true for unemployment (have you tried living on unemployment benefit/JSA?), and finding another job quickly is proving much more difficult than people realise. In the current environment, lenders 'forbearance' is sadly lacking so don't think they'll accept lower/no payments easily.
Much more attention should be paid to regulating the method of sale, rather than the timing. Once people have banked the money, the incentive to think about the consequences of not being able to repay has gone. I predict there will be much higher arrears in the future as the take up rate of PPI falls; which in turn will result in increased prices from the underwriters who will lose the spread of risk.
The ban will not encourage consumers to shop around or reseach insurance products that could help them if they were off work because of an accident, ill health, or made redundant.
Replacing mis-selling with mis-buying is not such a great idea either.
What's required is a sea change in attitudes towards taking responsibility for financial commitments. Things can and do go wrong but not for everybody. Insurance is just one of the available options that should be considered.
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