PPI is payment protection insurance and in the UK it has been the subject of a lot of controversy in recent years.
The big problem is not so much with PPI itself as with the way UK banks had been selling it to customers who didn’t really want it in the first place. The idea of getting some form of protection to make sure that you are covered in the event of anything untoward happening to you has perhaps been tainted in Britain but across in continental Europe it is going strong.
Recent research carried out by the consultancy Finaccord has confirmed that protection insurance on loans and credit cards is “alive and well” in various European countries. In fact, in 20 countries in mainland Europe value of both these types of PPI added up to almost €11 billion in 2011, which was a slight decrease from the equivalent data in 2007.
However, if we look at the figures for the UK in the same period the drop is far more dramatic; from €3.60 billion in 2007 to just €850 million in the last year. This is a direct result of the problems in the industry which has resulted in banks and other financial institutions taking their products off the market or stopping marketing them due to the misselling scandal.
France Is Best
Perhaps the big difference is that in other countries the PPI selling process is different? The investigations by Fiaccord revealed that the country with the best sales process is France, where customers are given a full and thorough explanation and given the option of getting the cover from a third party insurer if they prefer to do so.
It may be that PPI makes a comeback in the UK at some point in the future but to do so it is clear that a lot has to be done to regain the confidence of the consumers. Perhaps the British financial industry could learn something from their European colleagues in that respect, and in particular from the French model of selling this insurance product.
PPI has suffered from a loss of consumer confidence in recent years but this is not the case in the rest of Europe, where it continues to be a popular product which is sold in a responsible way.