The Competition Commission has published its final report on the PPI market. It found a distinct "point of sale" advantage for sales of PPI with loans and credit. This means consumers often do not know they can buy PPI elsewhere, tend not really to read the terms and conditions and rarely switch providers. Because of this lack of competition, prices for PPI are high. The CC wants to introduce a package of reforms including:  

  • bans on:
    • selling PPI at point of sale of a credit product or in the following seven days. But customers can take the initiative and contact the credit provider or intermediary to get PPI 24 hours after the sale; and
    • single premium PPI: premiums may still be payable annually or monthly, but if a customer cancels an annual payment policy they must have a pro-rata refund. And providers cannot charge customers costs for setting up or terminating a PPI policy.
  • measures to:
    • give customers binding quotes and enough information in marketing materials: this includes clear cost information and a statement that PPI is optional;
    • get information on to price comparison websites: providers must give certain information to FSA which should feed it into its website. OFT is also entitled to information for its work reviewing the remedies package;
    • use annual statements as a means of reminding customers they can switch provider;
    • generally make it easier to switch providers; and
    • require distributors who offer a bundled deal of PPI and merchandise cover to offer a package of just PPI.  

The CC suggests the measures take effect during 2010, with all changes in place by October 2010. We will be producing a separate detailed note on the report.