Consumers paying five times too much for mortgage payment protection insurance

Consumers could be paying five times too much by accepting payment protection insurance deals for loans offered by the lender.

11:54 30 November 2004

Consumers could be paying five times too much by accepting payment protection insurance deals for loans offered by the lender.

With one month to go before the FSA starts regulating the mortgage industry and payment protection insurance, consumers have been warned that regulation will not protect them from extortionate prices.

Richard Mason, director of insuresupermarket.com, described payment protection insurance as "probably the biggest scandal in financial services after pensions and endowments".

"While it is good news that this type of insurance will come under FSA control in January, it does not necessarily mean that the price of the insurance will be any cheaper," he added.

"It's all too easy to be lured into buying expensive protection, particularly if you are securing the loan against your house; there is always that veiled threat of losing your home so people are unwilling to take chances.

"This is of course understandable, but there is no need to pay over the odds to protect yourself.

"By shopping around and buying a standalone policy you could save yourself 1,200 over three years on a 7,500 loan."