The Competition Commission (CC) has published its final report into the Payment Protection Insurance (PPI) market and has introduced a package of remedies to address market competitiveness.  

The CC believes that the remedies introduced will address what the report has found to be the main barrier to competition in this market - the credit providers’ point-of-sale advantage.  

The current financial market has increased consumer need to obtain protection products, such as PPI. The CC believes that consumer choice and value for money are critical for the competitiveness of the PPI market.  

The CC published its provisional findings and possible remedies at the end of last year. After gathering further evidence from providers, consumer groups, the FSA and the OFT, the following remedies have been proposed :-  

  • Distributors and intermediaries will be unable to sell PPI products to customers within seven days of selling credit to that customer. This is expected to give customers a greater opportunity to compare products and providers. Customers may contact the distributor of the credit product on their own initiative after 24 hours.
  • Distributors and intermediaries will be required to provide customers with a ‘personal PPI quote’ which sets out the cost of the policy when added to the underlying loan.
  • Premiums should be charged monthly or annually, as it is considered that single-premium PPI policies' rebate terms act as a barrier to switching products.
  • All providers of PPI products should provide customers with particular information about the policies (such as price) and state that PPI is available from other providers.
  • PPI providers should provide certain information about their policies to the FSA. The providers should recommend that this information is used for the FSA’s price comparison tables. Information will also be required to be given to the OFT for monitoring purposes.
  • Annual statements on the PPI policy statements should be given to customers to encourage them to review their policy.
  • Distributors of retail PPI who offer other packages containing merchandise cover in addition to PPI must also offer PPI as a stand alone product.

The CC expects these measures to come into force during 2010.