Barclays backs down on payment protection drive

The lender confirmed it will be revising its entire PPI offering, just days before the Competition Commission makes its ruling on the payment protection market.

FTAdviser.com has learned that Firstplus intends to replace the current loan-linked product sold through intermediaries with a suite of around 50 protection products that sit closer to the critical illness and income protection products already available in the wider intermediary market.

Andrew Bond, spokesman for the Barclays division, said the lender is responding to market sentiment and conversations with mortgage brokers have already begun.

He explained: "We have plans in the pipeline to un-bundled our PPI offer, giving customers the options of various combinations of life, accident and sickness and unemployment cover.

"The products specification is still being finalised so we can’t talk about details yet, but we expect to start talking to brokers about the changes in the next couple of months."

In November, the lender had responded to criticism from consumer groups and the intermediary community when it justified its sales tactics to drive payment protection insurance sales through the intermediary community.

The Association of Finance Brokers (AFB) today (28 May) welcomed the move saying that other lenders are likely to follow suit.

Robert Sinclair, director of the AFB, said: "We are aware that a number of lenders and insurers are working together to provide protection products which should more closely address consumer needs.

"The importance of this for both the industry and consumers should not be under-estimated but there is a long way to go. The AFB is encouraging all participants to make this change sooner rather than later."