Payment Protection Insurance Crackdown
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The Competition Commission today said that PPI should not be sold to a customer within 14 days of being sold a loan. According to the BBC “the Commission said that the vast majority of more than 13 million PPI policies in the UK were sold at the same time as a consumer would take out the loan or been given other credit.
But at this point the banks, mortgage providers or credit card companies faced little or no competition, with consumers unaware they could buy PPI elsewhere.
This meant that the providers were able to charge high prices.”
Consumer groups have welcomed the proposed 14-day window that would allow consumers to shop around for a better deal rather than take the overpriced policies cuurently offered by banks.
Typically the banks and other financial institutions have criticised the proposals - here are a few of their predictable responses:
British Bankers’ Association - “It is totally without conscience to encourage people to borrow without back-up. The Competition Commission has gone well beyond its remit.”
Finance and Leasing Association - “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.”
Association of British Insurers - “By effectively denying consumers PPI in the very economic climate that they need it most, the Competition Commission has got this completely wrong.”
These comments should be viewed in the context of an earlier Competition Commission report which estimated that the public paid PPI premiums in 2006 amounting to £4.4bn, most of which went to the banks and other financial institutions who sold the policies, rather than the underwriting insurers.
No wonder they’re unhappy with today’s announcement.
Claim back your mis-sold payment protection insurance - it’s easy! Complete our 60 second online test now.
