Competition Commision Press Ahead with Payment Protection Insurance Change

Comptetition Commission The Competition Commission is pushing ahead with its proposal to ban the sale of payment protection insurance (PPI) alongside loans.

A public consultation on the proposals to reform the sale of the controversial insurance product has been launched, despite Barclays launching an appeal over the decision.

PPI offers consumers protection from falling into debt by insuring the payments on loans in the event the borrower falls ill or is made redundant.

But with many providers offering PPI alongside the loan, many were unaware they could shop around, leaving many consumers vulnerable to buying overpriced – and in some cases unsuitable – insurance.

Barclays has launched an appeal to the Competition Appeal Tribunal (CAT) against the changes, which include a ban on selling PPI with a loan and for seven days afterwards, and single-premium policies, which tack the cost of the policy onto the loan.

Lenders are keen to continue selling PPI not only for the income it generates, but also the policies protect them from higher levels of defaults that are expected due to the recession and rising unemployment.

Peter Davis, inquiry chairman and CC deputy chairman, said: "Whilst we are waiting for the outcome of the appeal, we are pressing ahead with the detailed work needed to put these measures in place.

"By continuing with the necessary preparations like this, we can hit the ground running once the appeal is finalised and we have considered the CAT's judgment."

The appeal will be heard on September 7th-10th. All PPI providers will be able to respond to the proposals, the Commission said.

Source: myfinances.co.uk

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