Competition Commission ban PPI sales alongside credit agreements

by Gill Montia

Story link: Competition Commission ban PPI sales alongside credit agreements

The Competition Commission has announced a ban on the sale of Payment Protection Insurance (PPI) during the sale of a credit product, and for a period of seven days thereafter.

However, consumers initiating contact with their loan providers after 24 hours will be able to buy the cover and lenders can still sell PPI to their customers, but only after seven days from the date of the credit agreement.

The new measures, which come into effect in 2010, will also see an end to single-premium policies, which involve the premium for the entire period of PPI cover being added to the loan.

After an extensive study of the UK’s PPI market, the Commission has concluded that lenders offering the insurance alongside a credit agreement face little or no competition.

In a newly published report, the body states that the majority of the UK’s 12 million PPI policies have been sold alongside credit agreements of one kind or another, with consumers frequently unaware that they could buy PPI from other providers.

The Commission believes that this point-of-sale advantage has made it difficult for other providers to access consumers and create a competitive market.

In related news, last week Alliance & Leicester, Barclays, Co-Operative Bank, Lloyds Banking Group and RBS/Natwest all announced that they will cease selling single premium PPI by the end of January.