News and Press
Competition Commission report heralds the end of Payment Protection Insurance as we know it

The Competition Commission (CC) has now concluded its examination of the level of competition in the UK market for payment protection insurance (PPI) and announced that the sale of PPI alongside loans and credit cards is to be banned in 2010. The CC says its measures will give customers "lower prices and better choice".

As such, the CC is planning to impose a package of measures to remedy anti-competitive behaviour, including:
• A ban on the sale of PPI by a distributor or intermediary to a customer within seven days of selling credit to that customer.
• Distributors and intermediaries will be required to provide a ‘personal PPI quote’, which will clearly state the cost of the PPI policy individually.
• A prohibition on the selling of single-premium PPI policies.
• A requirement on all PPI providers to provide certain information and messages clearly in PPI marketing material.
• All PPI providers will be required to produce an annual statement for PPI customers.

The Financial Services Authority (FSA), which had faced significant pressure from consumer bodies to tighten up sales practices around PPI, welcomed the Competition Commission's report, which aligns with its statutory objectives of securing the appropriate degree of protection for consumers and maintaining market confidence.

Suzanne MacDonald, Head of Financial Services Regulation at TLT, comments:
"The FSA has shown a willingness to take action against firms, and in some instances key individuals, for failures within the PPI sales process. Compliance with the CC's measures could be an onerous process for PPI providers, who will be obliged to provide to “any person on request” aggregate claims ratios, split by product type, for the previous year. In the lead up to the implementation of the new regime, it would be prudent for firms to ensure that they have a robust sales and marketing process which complies with the CC's package of remedies."