Payment protection insurance time of sale ban delayed

17 October 2009 / by Rachael Stiles

The ban on selling payment protection insurance (PPI) at the time of sale has been delayed by an appeal from Barclays Bank.

The judgement on Barclays' appeal found that the Competition Commission – which has been pushing for the ban – should reconsider the loss of convenience to the consumer by not being able to buy payment protection insurance at the same time as taking out a credit card, mortgage or other type of loan.

The Competition Commission has said that time of sale PPI restricts competition in the loan insurance market, because the consumer is not encouraged to shop around for the best deal, while others are pressured into taking out PPI which is unsuitable for them.

As part of its crackdown on bad selling practice in the PPI market, the CC suggested that an outright ban on selling PPI policies at the time of sale and for a week afterwards would remedy some of these problems, but Barclays has challenged that it could be detrimental to the consumer, and the Competition Appeal Tribunal's judgment has agreed.

The Competition Commission said that this judgement "has not questioned our findings on the lack of competition in this market. The CC has proposed a package of remedies and the judgment affects one element of that package."

Commenting on the judgment, Martin Lewis, of consumer revenge website, said: "It's a shame Barclays has succeeded in using its lawyers to delay the implementation of such an important ruling.

"Bank-based PPI is a near con – it's hideously over-expensive, billions of pounds of it have been missold, and the sooner it's cleaned up and cleared out the better. These policies are often up to 90% profit – with people being sold them based on erroneous facts and a belief they’re being protected at a fair rate," Mr Lewis said, adding that hoards of consumers have already successfully reclaimed thousands of pounds in mis-sold payment protection insurance.

"We desperately need a stop to this ‘auto-sales’ process where commission-based bank staff try and push borrowers into getting these policies," he continued. "Let's hope the Competition Commission manages to change things slightly and get through all the legal loopholes to help it protect consumers.

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