The reasons behind OFT’s referral
- 3RD MAY 2007
The financial industry was rocked in early February this year by the The Office of Fair Trading's decision to pass their investigation into the sale of payment protection insurance (PPI) on to the Competition Commission for a full investigation. The decision has been met with outrage from some quarters of the industry but has been welcomed by those who believe that it is long overdue.
There are very specific reasons as to why the payment protection insurance referral has occurred. Payment protection insurance is specifically designed to offer consumers peace of mind that their debts would be taken care of should they ever fall ill and become unable to work or be made redundant. However, the OFT found that the policies offered by high street banks were extremely poor value for money.
John Fingleton, the OFT’s Chief Executive, has said “Our examination of the evidence presented to date gives us reasonable grounds to suspect that there are features of this market which restrict competition to the detriment of consumers. Despite some evidence of a degree of consumer satisfaction with aspects of the product, the evidence as a whole suggests consumers get a poor deal.”
Independent insurance companies that offer payment protection insurance have welcomed the referral. The ethical British Insurance is just one of those companies.
British Insurance has always offered payment protection insurance that represents value for money because they only ever sell to fulfil a specific need. The referral will highlight the existence of these independent companies by opening up the market, and this will only be of benefit to consumers.
