ABI blasts proposals as “devastating news for borrowers”.
The Competition Commission would ban lenders from selling PPI to borrowers for 14 days after the loan had been agreed, under proposals published today.
The ABI warned the hardline proposals, designed to stop lenders pressuring borrowers into taking out PPI, could kill the PPI market.
The Competition Commission has outlined its plans for regulating the PPI market, following discussions with the FSA and industry. It has given interested parties until December 4 to respond.
The proposals include:
• A prohibition on the sale of PPI by a distributor to a customer within 14 days of the distributor selling credit to that customer, giving the customer more opportunity to compare products and providers.
• 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.
• A prohibition on the selling of single-premium PPI policies, which act as a barrier to customers switching and the costs of which are difficult to compare with other PPI policies.
• A requirement on all PPI providers to provide certain information and messages in PPI advertisements (including the price of their PPI, and that PPI is optional and available from other providers).
The ABI was highly critical of the proposals. Director for general insurance and health Nick Starling said: “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% 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.”
