Lenders have been at great pains to point out to the FSA and the Competition Commission that the granting of an unsecured loan is no longer dependent on whether the customer takes Payment Protection Insurance or not.

Yet my own experience shows that lenders haven’t given up on the hard sell yet!  I am in the unenviable position of wanting to convert part of my garage into a study/playroom, but not having the readies to pay for it.  So like all sensible people I had to take out a personal loan to fund this.  I’m good for the cash, so I knew that getting a cheap loan wouldn’t be a problem.

On Sunday morning I searched online for the best deal, from a major bank, then applied on the Web.  Fantastic, job done, sorted.  Roll on the builders.

However a couple of hours later I got a text message asking me to call the bank in question regarding my application, so I gave them a ring (on an 0845 number too, so not a free call!).

They just wanted to check a couple of things before proceeding with my application, but before starting they had to let me know that they were regulated by the FSA for any advice they gave etc. And then it started - can we just confirm your income and that of your wife…. so that means you will be taking home £xxx per month? What other outgoings do you have etc.  All fine and good, and perfectly reasonable.  Then they asked what a “Head of Insight” did, and who was this Defaqto that I worked for?  I explained that I led a team of consultants who research financial products like Payment Protection Insurance and that she wouldn’t be able to sell me PPI cover because I didn’t want it.

I’m not sure this fact registered because then it started - have I considered what would happen in the event I couldn’t repay my loan?  Did I have any other policies that might cover me?  We then went through all of my life insurance, critical illness, income protection, redundancy package, savings etc. information - a good 10 to 15 minutes spent discussing each of my other financial products.  I have to admit the girl was very thorough and tried every avenue to find a gap that needed to be covered, but in the end she had to admit defeat and so made a recommendation that I DIDN’T need payment protection, and would I mind going on hold while she processed my loan application.

I began to worry then - maybe I should have asked for PPI, or maybe I will not be offered the fantastic headline rate because I didn’t take it?

Eventually she came back with the good news that I WAS going to get the loan, and at the rate stated in my online application.  A good 25-30 minutes spent on a process that should have taken no more than 5 minutes (given that I already have other accounts with this bank, and had a current account with them until quite recently, so they knew a bit about me.

What is not surprising, having been at the receiving end of this process, is why so many customers might THINK that PPI was compulsory.  Or why there is a nagging doubt that the interest rate offered will be dependent on taking PPI out, or even more worrying what rate would I have been offered if I hadn’t been able to show that I had ample cover elsewhere?

The industry really needs to become much more customer friendly and give more reassurance that PPI really IS optional, if consumer confidence is to be maintained.