The UK’s Competition Commission (CC) has published its emerging thinking, based on its analysis to date, on competition in the supply of all payment protection insurance (PPI) to non-business customers in the UK. This does not include store card PPI.

The CC plans to publish its provisional findings on the supply of PPI in May 2008, with a final report to be published at the end of next year. The current document points to the areas which the CC will concentrate on prior to the publication of the report in May.

The CC’s investigation follows a ‘super complaint’ made by Citizens Advice in 2005. The CC’s inquiry into the supply of PPI is a market investigation under the Enterprise Act 2002. Ultimately the CC must consider whether any features of the PPI market prevent, restrict or distort competition in connection with the supply or acquisition of any goods or services in the UK. Where an ‘adverse effect on competition’ is discovered, the CC will have to determine what action should be taken to remedy any detrimental effect on customers.

The document divides the emerging thinking into a view of the underwriting market, retail market and the supply chain.

The paper focuses on the amount of competition for PPI at the retail level, where consumers buying a distributor's credit product appear to be relatively insensitive to PPI prices and the competitive constraints from other products (such as income protection) are limited.

Also considered is whether there are any competition concerns between underwriters and whether vertically integrated companies that operate both at the underwriting and distribution levels of the supply chain distort competition. In both the above cases, the CC does not currently propose to carry out further enquiries.

The CC has invited all interested parties to submit their views by 27 November 2007. It will then publish a further interim report in May 2008 setting out its provisional findings. The statutory deadline for the inquiry is 6 February 2009, although the inquiry group aims to complete its investigation more quickly than that.

For further information: Competition Commission: Payment Protection Insurance Market Investigation - Emerging thinking (PDF 382KB)