The Competition Commission has published its ‘provisional decision on remedies into the PPI market’.
One of the Commission’s key decisions include banning the sale of single premium policies. Currently, when PPI is sold alongside loans or finance agreements, it is 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.
The Commission will also prohibit the sale of PPI by the credit provider within 14 days of the sale of the credit, ensuring consumers are given the time they need to compare different insurance products and fully weigh-up this important financial decision.
The Commission will publish its final report in January, however Which? thinks that their provisional findings bodes well for consumers. Which?, chief executive, Peter Vicary-Smith has said: ‘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.’
While the Commission’s findings are good news for consumers, financial trade bodies reacted angrily to the report. The British Bankers’ Association has said: ‘The Competition Commission has gone well beyond its remit and the evidence it has which shows customers will only consider taking cover when they borrow and not afterwards. This is an irresponsible decision exposing vulnerable customers to economic difficulty when they may need help most.’
Which? has found that as many as 2 million people in the UK have been mis-sold PPI, meaning they are paying-out on a useless policy they will never be able to claim on.
To find out if you have been mis-sold visit the Which? payment protection insurance campaign.
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