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OFT refers PPI market to Competition Commission after public consultation

The Office of Fair Trading has referred the UK Payment Protection Market to the Competition Commission for further investigation.
The decision comes after a period of public consultation following the OFT’s earlier proposal to refer the PPI market to the commission in October 2006.
During the consultation the OFT received 20 responses including businesses, consumer organisations and trade associations.
Having considered the views of respondents the OFT says it is still of the view the competition concerns it identified prior to the consultation exercise remain valid and that an investigation by the commission is now warranted.
OFT chief executive John Fingleton says: “Our examination of the evidence presented to date gives us reasonable grounds to suspect that there are features of this market which restrict competition to the detriment of consumers.
Despite some evidence of a degree of consumer satisfaction with aspects of the product, the evidence as a whole suggests consumers get a poor deal. This referral will enable the Competition Commission to undertake a thorough investigation of the market and, if necessary, ensure that appropriate remedies are put in place.” managing director Shane Craig says: “Banks and lenders have hijacked PPI as a cash cow to generate huge profits by charging consumers over-inflated premiums and it’s inevitable that the reputation of the PPI market will be further tainted by today’ OFT announcement.
It is essential consumers are made aware that there is an affordable alternative and don’t risk leaving themselves open to financial problems by eschewing PPI altogether.
The naming and shaming of High Street banks and lenders – which will be the likely result of this CC referral – is almost certain to trigger a deluge of claims for compensation from disgruntled consumers”.


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