The CC is proposing banning the sale of PPI by a distributor to a customer within 14 days of credit being sold, however consumers can contact the distributor for PPI 24 hours after the sale.
Credit providers will be required to provide a “personal PPI quote”, which will clearly state the cost of the PPI policy individually and when added to the credit product.
The CC is also proposing a ban on the sale of single-premium PPI policies, which it says act as a barrier to customers switching and the costs of which are difficult to compare with other PPI policies.
The CC is inviting feedback on the proposals until December 4 and will publish its final report in January 2009.
The Association of British Insurers has slammed the proposals, saying they will leave millions of consumers unprotected.
ABI’s director of general insurance and health Nick Starling says: “This is devastating news for consumers. By effectively denying consumers PPI in the very economic climate that they need it most, the Competition Commission has got this completely wrong. Unemployment claims on PPI policies have grown by 69 per cent in the last twelve months, showing just how valuable this cover is proving to be.
“The Competition Commission still has the opportunity to rethink its proposals before publishing its final report in January. It is essential that it does so. We understand that poor sales practices are never acceptable and we will continue to work with the Commission to resolve the outstanding issues in the PPI market. However, if the Commission continues down this path it will kill the PPI market altogether, leaving millions of consumers with no protection at all.”