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Appeal rejects PPI ban

The Competition Appeal Tribunal has overturned the Competition Commission’s proposal to ban point-of-sale payment protection insurance.

A judgment issued by the tribunal following Barclays Bank’s appeal over the Competition Commission’s PPI remedy package, said: “The imposition of the point-of-sale prohibition must be quashed and remitted for reconsideration”.

In its ruling, the tribunal said the commission failed to take into account the loss of convenience which would flow from the imposition of a point-of-sale ban.

It also said that the methodology which was used by the commission in quantifying the benefits expected from its remedies’ package was defective.

The judgment says: “The combined effect of those failings, coupled with the self-sufficient failure to take convenience into account in its conduct of the proportionality analysis contribute to our decision that the imposition of the point-of-sale prohibition must be quashed and remitted for reconsideration.

“We quash the commission’s decision to impose the POSP as part of its remedies’ package and remit that question to the commission for reconsideration in accordance with the principles set out in this judgment.

“We have not, of course, concluded that the commission could not, by that process, lawfully decide to include the POSP as the result of that reconsideration.”

The Competition Commission says: “The judgment has not questioned our findings on the lack of competition in this market. The CC has proposed a package of remedies and the judgment affects one element of that package.

“We will now study the judgment closely before deciding our next steps.”

City law firm CMS Cameron McKenna partner Paul Edmondson says: “This is a wise decision. The commission did not take account of the difficulties that the ban would cause for consumers and the undesirable increase in uninsured borrowers which would result. The ban may be back, of course, but the commission should consider whether there are better ways to protect consumers.”

P3 Wealth Management managing director Frank O’Donnell says: “I think it is really important to discuss protection at point of sale. It is in the customers’ best interest because if they do not discuss it they certainly will not go back a month later to get cover.

“This is not a product that people will buy off their own back, it has to be sold.”

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