Point-of-sale PPI ban ruling is upheld - Insurance - News - Moneyfacts


Point-of-sale PPI ban ruling is upheld

Point-of-sale PPI ban ruling is upheld

Category: Insurance

Updated: 14/05/2010
First Published: 14/05/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The Competition Commission (CC) has confirmed that it is to ban point-of-sale Payment Protection Insurance (PPI), with the exception of retail PPI, despite a challenge by Barclays.

The insurance covers repayments on credit products if the borrower is unable to make repayment due to accident, sickness, unemployment or death.

However, in its report last year, the CC found that the vast majority of PPI policies are sold at the same time as a consumer takes out a product, typically a loan, credit card or some other type of credit.

Many consumers are unaware that they can purchase PPI from other providers, and rarely did consumers compare price and terms of conditions of PPI. It also found that the problem did not subside during the economic crisis.

As a result, it said at-point-sales should be banned, with providers required to wait at least seven days before offering cover.

The CC was told that it must reconsider its verdict by the Competition Appeal Tribunal, and was asked to consider the importance of the potential drawback of a point-of-sale ban, specifically the inconvenience to consumers.

However, the CC has upheld its original judgement saying that 'the benefits of the package of remedies including the prohibition, by introducing greater competition and choice and lower prices to the market, will outweigh the disadvantages, in particular the inconvenience to some customers.'

"Overall, we found that PPI providers are overstating the loss of convenience that would result from the introduction of a prohibition on selling PPI during the credit sale," commented Peter Davis, inquiry chairman and CC deputy chairman.

Peter Vicary-Smith, chief executive of Which? said PPI often puts consumers in a position where they have to choose between shoddy protection or no protection at all.

"It's important that PPI is sold separately from other financial products to help consumers make an informed choice and find the protection product that best suits their needs," he added.

Find the best loan for you - Compare loans

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

£2,833: the cost of a burglary

A while ago, a local newspaper featured a story of a burglary that saw thieves come in through the attic – an unusual sight. What most stories on burglary don’t feature, however, is the cost to the victims: a £2,833 bill.

Another insurance tax rise hits our wallets

At the beginning of this month a new rate of insurance premium tax came into effect, meaning it now stands at 10%, up from 9.5%. The ABI has called this a “raid on the responsible”, but what does it mean for you?

Students leaving home with £2K in belongings

Students nowadays leave for university with a lot more high-tech gadgets than they used to, resulting in an average £1,896 worth of property which could be dangerously under-protected.