Competition Commission clamps down on PPI
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The Competition Commission is looking to clamp down on the way retail payment protection insurance is sold.
In a document published today, the CC has put forward a number of proposals that aim to give clearer information to customers on the cost of retail PPI cover and their rights.
Retail PPI is a small part of the overall PPI market relating to protection taken out on repayments for shopping through home catalogues, typically accounting for about 2.5 per cent of PPI gross written premium paid by customers.
In May, the CC provisionally declined that consumers would benefit from the introduction of point-of-sale prohibition for all other forms of PPI, but provisionally decided to consider excluding retail PPI from this requirement. The CC will publish its final decision on whether to implement the point-of-sale prohibition for other forms of PPI in the autumn.
Earlier this week,Lloyds Banking Group stopped selling payment protection insurance across all five of its brands, saying it was “uneconomic” to continue selling the product given the uncertainty over future regulation.
Some of the proposals for retail PPI are:
- an obligation to offer PPI separately from merchandise cover if both are offered as a bundled product;
- an obligation to provide information about the cost of PPI and ‘key messages’ in marketing materials;
- an obligation to provide information to consumer financial education body for publication and to provide information about claims ratios to any party on request;
- a recommendation to CFEB that it uses the information provided to it under the above obligation to populate its PPI price comparisons table;
- an obligation to provide a personal PPI quote to customers before the end of the cooling-off period;
- an obligation to provide customers who have spent more than £50 on retail PPI premiums in the preceding 12 months with a written annual review of PPI costs including a reminder of the customer’s right to cancel;
- an obligation to remind all active customers of their cancellation rights and of key messages on an annual basis; and
- a prohibition on the sale of single-premium PPI policies and on charges which have a similar economic effect.
The CC will now invite comments on its proposals for retail PPI before publishing its final verdict along with that for the rest of the market in September.
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