Borrowers across the country may have been burdened with extra insurance policies that are virtually useless, yet all is not lost. The Office of Fair Trading yesterday issued an order for an inquiry into the selling of payment protection insurance . Car finance policies were just one of the loan types that had extra costs levied on them.

Payment Protection Insurance has been particularly lucrative for many lenders, with a profit of around £5.5 billion generated by the PPI market. The policies are sold along with personal loans, credit, and in some instances mortgages . The PPI market has a history of bad selling practices, including coercion.

Several major companies are at the centre of the inquiry, including HBOS, HSBC, Barclays and Lloyds, all major banks and financial services groups.

The chief executive of the OFT, John Fingleton, said: Many customers are failed by payment protection insurance (PPI), which gives them a poor deal and often less protection than they think. 7 million PPI policies were sold last year, mostly for unsecured loans, mortgages, credit cards and car finance.

Even when borrowers claim on the policies, apparently, less than a fifth of money paid out is returned in claims .

The days of PPI as an expensive, semi-compulsory and useless add-on may hopefully be numbered.