Payment Protection Insurance News PPI Market Faces Competition Shake Up To Avoid Mis Selling 18469632
PPI market faces competition shake up to avoid mis-selling
10 July 2009 / by Rachael Stiles
This week saw the publication of the Competition Commission’s consultation on how it will implement measures to introduce competition into the Payment Protection Insurance (PPI) market.
The measures were laid out in the Competition Commission’s final report into PPI in January this year, which concluded that businesses which sell PPI alongside products such as credit cards and loans face little or no competition.
To combat this lack of competition, the CC announced that selling PPI alongside credit products at the time of sale and for the following seven days will be prohibited, and single-premium policies (which add considerably to the total cost of the borrowing) will no longer be allowed.
Furthermore, better information and more quotes will be made available to consumers so that they can more easily compare and search for PPI, and switch policies at a later date if they so wish.
The new measures are being disputed by Barclays, which is appealing them to the Competition Appeal Tribunal, but the CC is moving forward with implementing the new rules.
Peter Davis, inquiry chairman and deputy chairman of the Competition Commission, explained why the CC is pressing ahead with the measures while the outcome of the appeal is decided: “By continuing with the necessary preparations like this, we can hit the ground running once the appeal is finalised and we have considered the CAT’s judgment.
“If the CAT supports our findings, taking these steps now will help ensure there is no unnecessary delay in resolving the significant competition issues that we found in this market and in delivering a better outcome for consumers,” he said.
In the past, lenders have gotten away with selling PPI to people without their consent, pressuring borrowers into taking out a policy, or telling them they must take out PPI if they wish to be accepted for the product. Since it was found that many credit customers have been mis-sold payment protection insurance in the past, hundreds have reclaimed their money.
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