Car loan customers concerned about PPI

Complaints from car loan customers and other consumers about the payment protection insurance (PPI) sold with loans, credit cards and mortgages are ten times as high as they were two years ago, according to a watchdog.

The Financial Ombudsman Service (FOS) said it receives 500 complaints a week about PPI, of which a "significant proportion" are being upheld. A spokesperson for FOS said: "PPI complaints have risen ten-fold in the past two years, and are now 25 per cent of all the complaints we get."

The watchdog has written to the Financial Services Authority (FSA) to alert it to the trend.

A lot of the complaints received by the FOS state that consumers did not realise they were taking out PPI when they were sold it alongside a car loan or credit card and that the cost of the policy was not made clear to them.

In many cases consumers are charged a single up-front premium which is added to the loan and attracts punishing levels of interest.

The FSA said: "The FSA is reviewing the position in the light of the information it has received from the ombudsman service, and the information provided by its own ongoing thematic work on PPI.

"It will make a decision on possible measures to take on the basis of this review in due course."