As part of the ongoing investigation into the way payment
protection insurance (PPI) is sold, the Competition Commission has
published a consultation document on its emerging thinking on the
PPI sector, and has said it is “far from making up [its mind]” on
how the product is sold.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Chairman of the inquiry and deputy chairman of the CC, Peter
Davis said: “The evidence we have seen suggests that the cost of
PPI is in some instances higher than the interest paid on
loans.”
He said that the inquiry was focusing on competition for PPI
“at the retail level”, and on how consumers behave when faced with
the option of adding PPI to their loan payments.
“At the moment our evidence base appears to suggest that there are
separate markets for PPI and credit,” Davis said, adding that the
inquiry is looking at competition between underwriters, and whether
“vertically-integrated companies” which “operate at both the
underwriting and distributing levels” cause market
distortion.
The CC has invited views on PPI from all interested parties, who
have until November 27 to reply.
PPI has come under sustained attack in the media in recent
weeks. Martin Lewis, the “Money Saving Expert” and well-known media
figure, has launched an all-out assault on the “protection racket”
of PPI, which he claims has been subject to “severe” mis-selling in
many cases. Lewis is urging consumers who feel they were mis-sold
PPI to reclaim the money they paid in premiums.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataHis claim, which has been taken up by newspapers and ITV’s factual
programme Tonight With Trevor McDonald, has the potential to cause
severe damage to the sector. Referring to the recent consumer
claims against bank charges, which have cost UK banks many millions
of pounds in settlements and refunds, Lewis said: “I think PPI
reclaiming could be bigger” – worrying words indeed for insurers
and financiers, and for motor dealers who partially rely on PPI
commission to prop up their margins.
