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UK Competition Commission publishes payment protection insurance remedies
The UK Competition Commission (CC) has published its proposed remedies for increasing competition in the payment protection insurance (PPI) market.
The CC concluded in its earlier provisional findings report that distributors of PPI - such as banks, mortgage providers, or credit card issuers - face little or no competition when selling PPI to their credit customers.
Accordingly, the CC is now proposing a series of remedies, including:
- a prohibition on the sale of PPI by a distributor within 14 days of the distributor selling credit to that customer, unless the customer proactively contacts the distributor;
- a requirement for credit providers to provide a "personal quote", which will clearly state the cost of PPI when added to a credit product;
- a prohibition on the selling of "single premium" PPI policies;
- a requirement for all providers to provide certain information in PPI adverts;
- a requirement for distributors to advertise PPI alongside loan adverts;
- a requirement for PPI distributors to provide PPI product information to the FSA for inclusion in price comparison tables; and
- a requirement for PPI providers to send an annual statement to PPI customers.
The CC plans to publish its final report in January 2009. The CC is also working closely with the Financial Services Authority, which regulates sales of PPI, and the Financial Ombudsman Service, which deals with customer disputes.
Frontier (Europe) advises HSBC.
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