just-published provisional findings on the payment protection
insurance (PPI) market have provoked outcry from the finance
industry.
As part of its efforts to increase competition among PPI
distributors, the CC has proposed the banning of single-premium PPI
policies. In addition, it wants to prohibit distributors from
selling PPI to customers within 14 days of the sale of a credit
agreement, in order to nullify what it calls the “point-of-sale
advantage” and to “give the customer more opportunity to compare
products and providers”.
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Finance companies will also be required to provide a full
breakdown of the cost of PPI cover, both individually and when
added to the cost of the credit product.
Interested parties have until December 4 to reply to the
proposals, which the CC plans to publish in a final report due in
mid-January.
The Finance & Leasing Association reacted with horror to the
CC’s provisional findings and proposed remedies, saying it was
“highly disappointed”. Director-general Stephen Sklaroff said:
“Preventing customers from buying PPI when they take out new credit
will mean that many vulnerable people go unprotected just when
unemployment is rising sharply.
“The loss of single premium PPI will also result in worse terms
for many customers. The commission’s proposals, which will raise
the cost of credit, have ignored the Prime Minister’s concerns
about rising interest rates. We call on the commission, even at
this late stage, to reconsider.”
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By GlobalDataThe Association of British Insurers said the proposed remedies
could leave “millions of consumers unprotected” as unemployment
levels rise and PPI becomes more vital than ever to help debtors
avoid financial hardship. Nick Starling, the ABI’s director of
General Insurance and Health, said: “This is devastating news for
consumers. By effectively denying consumers PPI in the very
economic climate that they need it most, the Competition Commission
has got this completely wrong.
“Unemployment claims on PPI policies have grown by 69 per cent
in the last twelve months, showing just how valuable this cover is
proving to be.”
