The announcement today from the Competition Commission that lenders will face severe restrictions on the sale of payment protection insurance (PPI) represents a victory for Which? and our long-standing campaign against this expensive insurance that you might never be able to claim on.
The sale of controversial payment protection insurance alongside credit agreements will be banned in 2010, the Competition Commission said today.
But it has halved the time that companies must wait before they can contact consumers to sell them the cover, from 14 days to seven days.
The sale of single premium PPI policies, in which the cost for the entire term of the policy is paid upfront and usually added to the debt being taken out, will also be banned.
Consumers encouraged to shop around
The Commission is introducing a package of measures to boost competition in the market, including personal PPI quotes for consumers, annual statements on the cover, and better information to make it easier for people to shop around and switch provider.
In its final report, it said the vast majority of the UK’s more than 12 million PPI policies were sold at the same time as people took out credit cards, loans or other credit agreements, with many consumers unaware that they could buy PPI from other providers.
It said this point-of-sale advantage made it difficult for other providers to reach credit customers, leading to consumers being charged high prices.
Which? says time for industry to get house in order
As the Competition Commission announces its recommendations into the PPI market, Louise Hanson, Head of Campaigns at Which? says:
“This decision helps sound the death knell for PPI. For too long too many consumers have suffered from shoddy, expensive and inadequate protection. It’s a great shame that since we began campaigning for better products, many people have wasted millions of pounds on PPI and have been ripped off in the process.
“Industry shouldn’t wait until 2010 to get their house in order and the FSA should make them act sooner. Last week five major lenders* said they’d pull out of the single premium market by the end of January. PPI has been thoroughly investigated for years and everyone knows its failings, so what’s the industry waiting for?
“We’re finally seeing the light at the end of this very long tunnel but it’s now time for the industry to develop useful products that consumers actually need to protect their finances.”
Find out more about our PPI campaign.