Competition Commission
The breaking news on 14 October 2010 was that the stance of the Competition Commission (CC) regarding payment protection insurance came in firmly against point-of-sale purchases. Their report (located on the official Competition Commission website) details the dangerous monopoly which point-of-sale PPI purchases represented.
The argument of the CC was simply that the lender was far more likely to purchase PPI insurance directly after securing his loan from the financial institution. Not only did this method tend to be followed by far too many claims of misrepresentation and coercion but it also generally meant that the resulting monopoly, or lack of opportunity for market competition, prevented the client from fairly seeking a better price.
Concerns have been raised by conglomerates such as Barclays and Lloyds Banking Group, among others. Their argument was that removing the ability of the institutions to offer loan protection at the point-of-sale would greatly inconvenience the clients themselves. The Commission argued before the Competition Appeal Tribunal that although this might be true to some degree, the positives for consumers outweighed the negatives.
The Commission is now moving to implement its measure into the market which also includes a proscription against the sale of single premium policies, a requirement to supply personal PPI quotes, yearly reviews, and several other steps designed to make the PPI market more transparent and the various products more readily comparable.
The Commission's 2009 report stipulated that the overwhelming majority of the over 12 million PPI policies in the UK had been sold at the point-of-purchase of a loan agreement with the same financial institution. The report went on to detail its findings that too many consumers were unaware of the fact that they were able to purchase the payment protection insurance elsewhere and at a later stage once they had had a chance to effectively compare quotes.
