Unfortunately, when we are looking to arrange a loan or overdraft, we tend to be in a vulnerable position.

We are often under pressure to take some form of insurance protection, even if we do not feel it is particularly needed.

Sometimes, some of us will not just accept this, which was how one Argus reader felt when he applied to Chartered Trust for a loan.

Our reader contacted the firm, which offered to lend him £3,000 over three years. The interest rate was quoted at 19.9 per cent. In addition to this, he was encouraged to take out loan protection, primarily designed to cover redundancy and other financial hardship. The cost would have been approximately £770, just over 25 per cent of the original loan.

Our reader did not want this cover because he is self-employed and, as such, cannot be made redundant and, second, he is in receipt of a reasonable occupational pension as he took early retirement from his previous employment.

So he told the representative from Chartered Trust that he did not want the payment protection insurance.

Our reader found he had a problem. He says he was told it was an underwriting requirement that he had it. He told me that he asked: "Does this mean that this is being imposed?" and was told "more or less".

He was not fazed by this response and categorically said that he did not want the insurance.

Eventually, he was told that he did not need to take out the insurance and was offered the loan without it. The only difference was the interest rate was now 25.9 per cent, six per cent above what was offered as long as he took out the payment protection. This was when he contacted me.

A spokeswoman from Lloyds TSB, the holding company of Chartered Trust, having investigated the allegation said: "This should not have happened. It was a genuine mistake and a junior employee was involved".

She went on to say procedures had been looked at and put in place to stop it happening again and loan protection insurance was not a requirement for taking out a loan. She thanked The Argus for bringing the matter to their attention.

Soon after our intervention, our reader was offered the loan at the lower rate, without the insurance.

- Garry Spencer