David Prosser: Avoid the sharks but don't forget PPI

Outlook: The Independent celebrated a major victory on Thursday, with the announcement from the Competition Commission that it is proposing to ban sales of payment protection insurance by credit providers within the 14 days immediately following the provision of a loan. This newspaper has repeatedly warned of the scandalous abuses in the PPI market, where banks and other lenders have sold borrowers poor quality, overpriced insurance alongside their loans.

One really unfortunate consequence of this affair has been that borrowers have understandably become much more wary about buying the cover, even those policies that actually offer decent insurance in return for competitive premiums.

The latest figures from the Council of Mortgage Lenders show that sales of PPI linked to mortgages are now at an all-time low. Fewer than one in five mortgage borrowers has insurance in place that would cover their repayments in the event they fall sick, have an accident or lose their jobs.

Unfortunately, this is just about the worst time imaginable for PPI sales to be plunging to an all-time low. With unemployment projected to hit two million by the end of the year, those who can afford insurance should certainly be considering it. Claims data suggest that the typical pay-out on a mortgage-linked PPI policy covers the holder's home loan repayments for just short of six months, providing a valuable breathing space that might just make the difference between getting your finances back on track and losing your home.

By all means, cast an extremely sceptical eye over the insurance on offer from your mortgage lender but don't reject PPI out of hand. An independent insurance broker – get details from the British Insurance Brokers Association – should be able to help you avoid the sharks and find a policy that could prove invaluable.