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PPI remedies could hinder protection sales, warns PwC

The Competition Commission’s proposals on the sale of payment protection insurance could see the level of consumer protection fall, warns PricewaterhouseCoopers.

The CC’s proposed PPI remedies, which include banning point of sale PPI and single-premium policies, have been described as a “mixed bag” by PwC regulatory practice director David Morey.

Morey says: “Whilst some remedies are likely to be positive for consumers, there must be a real concern that the level of protection provided to customers will fall, potentially in a dramatic fashion.

“The CC’s remedy to de-link the sale of PPI from the credit will without doubt lead to a significantly lower amount of cover being sold. That does not seem to be a sensible thing to be doing in the current climate.”

Morey says with the protection gap already at £2.3tn, the proposal to ban credit point of sale could mean that consumers will be “less inclined” to reassess their protection needs outside of the credit sale process. The remedies also seem to be “tilting the playing field towards ‘stand alone’ distributors”, fears Morey.

He says: “If the Commission does proceed with this set of proposed remedies, lenders will need to make significant changes to existing models which is expected to lead to higher loan costs. Again, the timing of this is clearly not helpful.”


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Professional perspective

The McDonald report on training and competence in the financial services industry was published by the Securities and Investments Board in May 1990. The report was accepted by the board shortly after that and the process of implementation began after that. It took four years altogether.

Martin Foden discusses how convenience is affecting the construction of fixed income portfolios

In this short video, Martin Foden, head of credit research at Royal London Asset Management, discusses how convenience is affecting the construction of fixed income portfolios. Watch the video in full The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not […]


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