Finance Industry Gangs Up On Competition Commission
We reported recently on how the Competition Commission (CC) had issued a proposal to ban the sale of Payment Protection Insurance (PPI) at the same time as the sale of any type of personal loan, or other credit agreement.
The CC also proposed a complete ban on single premium PPI policies. This was due to the extremely large number of complaints of miss selling which have been made by consumers in relation to these products and also to allow people taking out a new personal loan to be able to shop around for the most competitive cover to meet their needs. The ban on selling PPI at point of sale of a loan also related to Mortgage Payment Protection (MPPI), which is the equivalent policy for home owner loans and mortgages.
The Association of Finance Brokers (AFB) has welcomed the proposal to enforce a 14 day waiting period before PPI is sold to accompany a personal loan or credit card, but feels that a complete ban on the sale of single premium policies would actually be detrimental to consumers as this would have the effect of limiting choice for customers to protect their loan repayments, particularly in these uncertain economic times.
The Association of Mortgage Intermediaries (AMI) has also called for MPPI to be excluded from the proposals, claiming that this type of cover is very different from other types of PPI policy which is used to protect repayments on personal loans and credit cards and also adopts a different sales approach, largely from advised sales processes from professional advisers who work for the consumer on an independent basis.
A spokesman commented on the proposals “We were pleased to see confirmation that the prohibition of the active sale of PPI by a customer within 14 days of the sale of credit had not been applied to intermediaries and only distributors. However, we also call again for the Commission to acknowledge and understand the benefits to consumers of using intermediaries who act as an agent of the client.”
