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Payment protection insurance rethink


Friday October 16th 2009

The competition watchdog was ordered today to reconsider its plan to ban the sale of controversial payment protection insurance alongside credit agreements.

The Competition Appeal Tribunal called on the Competition Commission to reassess why it thought the ban was needed.

The move follows an appeal by Barclays against the decision to ban the sale of insurance alongside credit cards, loans and mortgages from October next year.

Barclays argued that the ban was disproportionate and not justified by the evidence collected by the Commission as part of its investigation into the issue.

It said the Commission also failed to consider the consumer detriment that could arise as a result of the ban.

In its judgment, which was released today, the Competition Appeal Tribunal, said: "The tribunal concluded that the commission had failed to take into account the loss of convenience which would flow from the imposition of the point of sale prohibition in assessing whether it was proportionate to include it in its proposed remedies package.

"In the tribunal's view, this constituted a failure to take into account a relevant consideration, and the tribunal has therefore decided to quash that part of the report which imposes the point of sale prohibition as part of the proposed remedies package."

It added that it was asking the commission to reconsider whether the point of sale ban should be included in its measures to boost competition in the market for payment protection insurance (PPI).

The point of sale ban was one of a number of measures which were due to be introduced next year, alongside changes to make it easier for people to shop around for PPI and to change providers.

The changes were expected to lead to a steep fall in the £4 billion a year that banks and insurers receive from PPI sales.

But the Commission said it was now reviewing the timescale for implementing the changes following today's judgment.

PPI covers loan repayments if the holder is unable to work due to an accident or illness or if they lose their job.

Copyright © Press Association 2009

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