According to a report in the media, the UK's financial watchdog is set to clamp down on the way lenders calculate payments insurance when offering loans to consumers. reports that the Financial Services Authority is to examine the way some UK lenders effectively ‘bundle in’ payment protection insurance – or PPI – for the term of the loan and add it to the loan amount.

As a consequence, consumers who wish to cancel the PPI midway through their repayments can do so, but they may not receive a full refund upfront, the news report says. This Is Money adds that some lenders offer no refund at all.

The Financial Services Authority is reportedly keeping a close eye on the situation and could force those lenders not offering refunds to change their policies.