New customers with Lloyds Banking Group will not be ripped off by the sale of payment protection insurance (PPI) alongside loans, mortgages and credit cards after the high street bank announced it would stop pushing the product.
The first of the banks to take this step, Lloyds said as of 23 of July its Lloyds TSB, Halifax, Bank of Scotland, Cheltenham & Gloucester and Black Horse brands had stopped selling PPI.
Instead, brands that fall under the Lloyds umbrella will hand out leaflets on PPI put together by the British Bankers' Association.
PPI is a product designed to help customers with borrowing repayments if they should fall ill, or made redundant and unable to work.
The practice of selling PPI to a customer when they are taking out a new product has come under considerable fire by regulators because of the product's many exclusions and the way it has been pushed.
Individuals who currently have PPI policies alongside Lloyds products will not be affected by the changes and the bank has assured customers it will not raise credit card and loan rates to pay for the loss of revenue it is likely to suffer.
Peter Vicary-Smith, chief executive of consumer watchdog Which?, says: "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 is the beginning of the end for PPI."
What next for PPI?
Over the past five years there have been investigations by the Office of Fair Trading, the Financial Services Authority and the Competition Commission into the sale of PPI. And almost one third of the complaints received by the Financial Ombudsman Service last year were in relation to 'mis-selling' of the product.
In May this year the Competition Commission ruled it would continue in its attempts to achieve an outright ban of offering PPI at the point of sale.
Now Lloyds has thrown its considerable weight behind the issue, it is likely such attempts will be more successful.
A spokesperson for the banking group said: "This move reflects the uncertainty around the regulation of PPI sales and processes. The group believes further changes in regulation will make it uneconomic to continue to offer these products in their current form."