The selling of loans PPI (payment protection insurance) policies has been under review by the FSA for a few months now and the organisation recently issued a status report indicating it's disappointment of the industry's progress in the area.

Protection insurance is a big money earner for loans companies - some say it earns them more money that the loans themselves. When a customer is signing up for a new loan, most companies will try to sell the borrower an insurance policy alongside the loan. The policy is supposed to provide cover to maintain monthly repayments should the borrower's earnings drop due to unemployment or illness.

Nothing wrong with that you might think but the FSA has issues with the way the policies are sold and how some customers may be being misled.

Although the policies can be expensive, the FSA can't do anything about that, it's a competitive market after all, but they want to make sure that customers are made fully aware of what they are buying and what it covers. Also they want to ensure anyone taking out a loan knows the insurance is optional.

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