PPI Sales Restricted in New Move by Competition Commission

13th February, 2009

The Competition Commission (CC) has prohibited the sale of payment protection insurance (PPI) alongside credit products, and for seven days afterwards, after concluding there was a lack of competition in the marketplace.

It has also banned the sale of single-premium policies, whereby the entire policy is paid for upfront, and introduced the requirement for PPI suppliers to provide personal quotes for consumers.

Expected to take effect in 2010, the move has been designed to create a more open market, as well as encourage individuals to compare and research PPI policies.

In a statement to the press, the commission commented: "The vast majority of the UK's more than 12 million PPI policies are sold at the same time as a consumer takes out a loan, credit card or other type of credit."

ABI hits out at PPI move

Commenting on the move, the Association of British Insurers (ABI), which just a day before the CC released its final report stated PPI claims had risen by 113 per cent, said the ban has not helped to address the risks borrowers face when they take out credit products.

It said: "The ABI supports any measures that help people make an informed choice … However [it ] believes the point of sale ban carries significant risks for borrowers, mainly by leaving them unprotected at a time when unemployment cover has never been needed more.

"We welcome the reduction from 14 to seven days for the point of sale ban, which shows that the Competition Commission has acknowledged our fears about the risks to borrowers. However, we remain extremely concerned that the fundamental risks to borrowers have not been addressed. Our job now is work with our members and the regulators to minimise these risks and make it work."

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