The Financial Services Authority (FSA) has raised concerns over the sale of insurance alongside unsecured loans.
According to the watchdog, there will be greater regulation following findings of its own investigation.
Mystery shoppers acting on behalf of the FSA were found not to have had policies properly explained to them, with failings including the fact that many were not informed of the interest that would be charged because the cost was added to the unsecured loan.
The body advised that banks may "wish to consider" suspension of sales alongside unsecured loans while it contemplates what action should be taken.
"We will intervene to ensure consumers are protected and are considering what regulatory powers are the most appropriate to deliver fair outcomes," said managing director of the FSA's retail markets Jon Pain.
Payment Protection Insurance is often offered as a means to ensure repayments are kept up in the event that a borrower is unable to work.
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