- Friday, 14 May 2010Borrowers who fear being dragged into
debt management plans due to expensive payment protection insurance (PPI) fees could be reassured by a new ruling.
The Competition Commission (CC) announced today (May 14th) that it has provisionally decided to ban point-of-sale payment protection after an inquiry into PPI.
This means that lenders can no longer sell PPI at the same time that the personal
loan or credit card is being taken out.
Furthermore the CC believes this will benefit consumers who will be able to look around for the best deals and won't be forced into getting expensive PPI which could lead to the need for
debt management in future.
Peter Davis, inquiry chairman and deputy CC chairman, said: "PPI customers currently have little choice and prices are high because competition is very limited. It is notable that even in the depths of the recession following the financial crisis we found that the economic profits of PPI distributors remained significant."
More than 12 million PPIs have been sold at the same time a consumer takes out a
loan, credit card or other type of credit.
PPI covers repayments if the borrower can no longer do so due to illness, accident, unemployment or death.
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