The Competition Commission Referral
- 15TH MAY 2007
The fate of the payment protection insurance (PPI) sector is in the hands of the Competition Commission after it was referred by the Office of Fair Trading. This was as a result of findings that found that competition within the sector was very restricted resulting in consumers getting a poor deal.
At the moment as the sector stands, payment protection insurance (PPI) policyholders often get a very raw deal when they take out a policy. But while the intervention of the Competition Commission is welcomed by independent specialist providers such as Simon Burgess from British Insurance, until the outcome there is very little protection from being ripped off in the mean time.
The biggest problem with the sector is that right now the banks and other big names in the financial sector have a hold over the market with about 80% of sales being associated with them.
The problem with this says Simon Burgess is that the banks charge ridiculous amounts for the cover. They also lead the consumer into believing that they have to purchase the cover at the same time as their loan or credit card, which is simply not true. Consumers are also sold policies that they would have no chance of ever claiming on should they need to.
Payment protection insurance is a lifeline for those who take out mortgages, loans, credit cards and similar. Should they find themselves out of work due to accident, sickness or unforeseen unemployment, the policy will provide a tax free monthly lump sum that can meet all an individual’s monthly credit commitments.
However, says Simon, “clearly in some cases, the policy is falling way short of that promise simply down to the fact that it is been sold incorrectly and often at over inflated prices”.
