Did you hear about the latest report on Payment Protection Insurance (PPI) ?

The Competition Commission is the organisation that "does the legwork" when an investigation into potential trade restrictions is needed.

They investigate when requested to do so by other official bodies, or a Secretary of State.

A report on Payment Protection Insurance was published by the Competition Commission on January 29th, 2009. The investigation was requested by the Office of Fair Trading, in response to a Supercomplaint organised by Consumer Advice in 2005. This is the summary of their report:

Summary

1. We found that each distributor and intermediary faces little competition for the sale of Payment Protection Insurance (PPI) when it is sold in combination with the credit it insures. We found that there were features of relevant markets which led to an adverse effect on competition (AEC) in these markets and in turn resulted in consumers facing higher prices and less choice than they would if there was effective competition between PPI providers. As a result of this lack of competition we found that it is highly profitable for distributors to sell PPI, though we found that some of the resultant profit is used to subsidize credit prices.

 We concluded that there were serious deficiencies in the competitive process for selling PPI policies, and, in order to remedy the adverse effects identified, a package of remedies would be required which includes some significant restrictions on what parties selling both PPI and credit can do (and also impose some burden on parties that offer only PPI to consumers).

 We concluded that such an intervention in these markets would enhance overall consumer welfare, and that the scale of the problem identified warranted a significant intervention.

2. We concluded that we should impose:

a prohibition on distributors and intermediaries from selling PPI to their credit customers within seven days of a credit sale, unless the customer has proactively returned to the seller at least 24 hours after the credit sale;

a prohibition on selling single-premium PPI policies (where the premium is paid in one upfront payment, generally by adding the premium to the credit borrowed);

a requirement on retail PPI distributors to offer retail PPI separately when they also offer retail PPI bundled with merchandise cover;

and several requirements to provide specified information in marketing materials, at the points of sale of credit and PPI, and each year after the PPI policy has entered into force.

The full Competition Commission PPI report

Citizens Advice refers to PPI sales as a "protection racket"

If anyone tries to sell me PPI with a purchase or loan, I am definitely going to argue a lot harder, now the shortcomings are officially exposed.

But why haven't I heard about this report, until I stumble upon it on the www? Have the media been too preoccupied to notice this investigation?

PPI can be a rip-off -and now that news is OFFICIAL.  

Be careful where you get your Payment Protection Insurance!