Consumers Should Boycott Banks and Not be Bled Dry by Lenders Says Burgess

Banks and building societies that continue to use devious tactics to take cash from customers must be boycotted says Payment Protection Insurance lobbyist Sara-Ann Burgess from specialist firm Burgesses.

Braintree, Essex (PRWEB) June 7, 2009 -- Banks and building societies that continue to use devious tactics to take cash from customers must be boycotted says Payment Protection Insurance lobbyist Sara-Ann Burgess from specialist firm Burgesses.

Her call to action follows news that credit providers are charging customers as much for monthly-paid payment protection insurance as they did for now-outlawed single premium policies - when the cost was added onto the value of the loan and interest charged on both. Payment protection meets monthly financial commitments such as loans, mortgages and credit card bills if the policyholder's income is interrupted due to redundancy, an accident or sickness.

Consumer association Which? recently published research revealing how a customer repaying a £5000 Alliance & Leicester loan with monthly PPI in June would shell out the same in interest payments and premiums as a loan with a single premium policy in November 08.

The Financial Services Authority called for members to stop selling single premium policies earlier this year - a move that was criticised by many credit providers who foresaw a dramatic dip in profits. Financial research firm Datamonitor estimated that in 2007, single premium products accounted for 68% of a £5.5bn + market dominated by lenders.

Sara-Ann comments: "Credit providers have made vast profits out of PPI over the years and they do not want this income stream to end. Rather than lose out, they're pressurising customers into buying cover at extortionate premiums at the time their loan is agreed. And it isn't just in the area of PPI where lenders are fleecing customers and showing their true colours - they're hiking up loan rates, contrary to Bank of England reductions, and plundering customers' everyday accounts by increasing overdraft costs."

Financial comparison firms Moneyfacts, Moneyextra and Moneysupermarket confirm this. Moneyfacts recently issued reports detailing how lenders are ignoring base rates and making their own rate adjustments in a bid to seize more cash from customers. It revealed how the unsecured personal loan rate for a person borrowing £5000 has jumped 44% in two years. The average rate in May 07 was 8.6% and it is now 12.4%.

Moneyextra highlighted how lenders have set their Standard Variable Rate at an average of 4.19% above the base rate of 0.5% - in the case of Cheltenham & Gloucester and Lloyds it is up to 5.99%. This time last year the average rate was 1.9%. It reported a third of those surveyed were unaware the average SVR is 8 times higher than the base rate and voiced concerns at customers misguided sense of loyalty towards lenders in trusting them to adjust rates in line with base rate settings.

Moneysupermarket scrutinised overdraft interest rates and found that lenders have been quick to increase the financial pressure on customers already in the red. Nationwide has hiked its Flexi Account overdraft costs from 9.9% in February last year to 18.9% in June this year and Barclays account holders will pay 19.3% from 8 June, as opposed to 15.6% last year. Lloyds, HSBC and NatWest customers will pay between 18.9 and 19.24%.

Sara-Ann continues: "It's costing more to borrow money, at a time when the Bank of England is stabilising rates. Lenders are making customers pay more when they act in a financially responsible way and take out PPI and punishing them if they go overdrawn. People need all the financial support they can get, but they are being bled dry by the very institutions that caused the economic downturn in the first place."

She concludes: "I urge disgruntled customers to vote with their feet and where they can, move their accounts elsewhere and search for more competitive loans. In the case of PPI, source cover from independent providers - they offer far superior benefits and cover and the premiums are cheaper."

Standalone firm British Insurance has won more awards for its PPI portfolio and customer service than any other UK firm. Premiums are £3.40 per £100 of benefit for unemployment cover.

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