PPI revamp to continue despite plea over plans

Published on Wednesday 8 July 2009 21:28

THE Competition Commission is to proceed with its crackdown on the payment protection insurance (PPI) market, despite an appeal against its plans.

The commission yesterday launched a consultation setting out the measures it wants to take to improve competition in the market.

PPI is designed to cover loan repayments in the event of the policyholder being unable to work due to an accident or illness or unemployment. A Competition Commission investigation concluded in January that the sale of PPI alongside the loan agreements the product is designed to cover – accounting for the bulk of sales – was to the detriment of consumers, who were often overcharged for the insurance and unaware that they could buy it elsewhere.

The commission recommended that credit providers have to wait seven days after the loan is taken out before selling insurance. It also called for a ban on the sale of single-premium PPI (where the entire cost of the policy is paid up front), which was implemented in June after the Financial Services Authority brought forward the commission's recommendation.

Several banks have appealed against the recommendations, particularly the point-of-sale ban, and the Competition Appeal Tribunal (CAT) hearing is scheduled for 10 September.

Commission deputy chairman Peter Davis said: "By continuing with the necessary preparations, we can hit the ground running once … we have considered the CAT's judgment."