Consumer group Which? has said that the Competition Commission should follow the lead of five banks and ban single-premium payment protection insurance completely.
Single-premium payment protection insurance (PPI) should be banned outright, according to a consumer organisation.
Five of the countries biggest banks, including the Lloyds Banking Group, recently said that they will no longer sell single-premium PPI with unsecured personal loans after the end of the month. However, Lucy Widenka, personal finance campaigner at Which?, said this should be a precursor to a total ban.
PPI is a type of cover which helps policy holders keep up with repayments on debt - such as mortgage or credit cards - in the event they cannot work or lose their job. However, the single premium option involves paying the total cost at the beginning of the cover.
"Although these firms have pulled out of the market there are still other firms who won't voluntarily do it so the Competition Commission who are looking at this issue at the moment should ban the sale of single premium PPI," Ms Widenka said.
She explained that the problem with the insurance is that PPI in general "can be quite limited in what it covers", but that single-issue PPI is "a badly designed product, it is often mis-sold and it can be expensive".
"Part of the reason is that the cost of the insurance is added to the loan upfront so what happens is you land up paying interest on both the loan and the insurance," she said. "This can then lead to the situation where someone is paying interest on the loan, but the policy itself has actually run out, she said.
