Competition Commission decision is a victory for consumers, says Which?

13 November 2008

As the Competition Commission announces its ‘provisional decision on remedies into the PPI market’, Peter Vicary-Smith, Chief Executive of Which? says:

“This is a huge victory for consumers who have often felt pressured into buying expensive and inadequate PPI products. The Competition Commission has listened to the consumer voice and has taken decisive action.

“Single premiums trap people into poor value products that are difficult to get out of, but by staggering the payments, consumers will have more control. This sounds the death knell for shoddy protection and is a wake up call to the industry to develop useful products that consumers actually need.”

Notes to Editor

Go to www.which.co.uk/ppi for information on how to make a claim if you think you were mis-sold and template letters to send to your provider.

Some of the key decisions from the Commission:
· Banning the sale of single premium policies
· Prohibiting the sale of PPI by the credit provider within 14 days of the sale of the credit
· Credit providers have to give consumers a personal PPI quote which states the cost of the insurance on its own and when added to the credit product
· The provision of an annual statement to all PPI customers reminding them that they can cancel the policy. The statement has to be sent separately from the credit statement
· Solutions for making advertising clearer
· Obligatory information provision to the FSA for publication in their PPI comparison tables and on annual GWP (Gross Written Premium) and claims ratios to the OFT

Information on PPI
· PPI only pays out for a limited amount of time, usually 12 months, although some policies offer a 24 month pay-out period.
· Credit and store card PPI often covers only the minimum amount that must be paid each month.
· When sold alongside loans or finance agreements, PPI is currently sold as a ‘single premium policy’, which means a lump sum covering the cost of the insurance is added to the amount you have borrowed, so you end up paying interest on both the insurance premium and the loan.
· PPI policies last for just five years, so if your loan or finance agreement is for longer than this, you’ll still be paying interest on a policy that has long since expired.

What Which? has done:
Since the late 1990s, Which? has been calling for changes to the PPI market. Over the years our research has shown that PPI is often mis-sold, which is why we’ve launched our campaign to help consumers gain the compensation they deserve. In May 2007 Which? gave evidence to the Competition Commission as part of their enquiry into the PPI market.

What Which? called for:
· As with other insurance products, we want people to pay regular premiums and not a single payment which is charged interest
· Transparent pricing
· People to be sold PPI and the main product (e.g. credit card, loan etc.) separately

In these difficult times Which? urges everyone to think about how to protect their finances and shop around for the best deal that meets their needs.