Provisional ban on PPI sales announced

An announcement has been made by the Competition Commission confirming its provisional ban on the sale of PPI, or Payment Protection Insurance, alongside the majority of credit products, according to recent reports. PPI has been at the centre of controversy for some time following investigations that found it was being widely mis-sold.

PPI was designed to cover the policyholder for repayments on the loan or finance agreement in the event of situations such as redundancy, illness, or injury, which could result in the borrower being unable to keep on top of the repayments. However, it was found that in some cases the policies were being sold to those that did not even qualify for them as well as those that did not want them or need them.

Following investigations, which sparked concern over how some lenders were hard-selling these policies and making out in some cases that the borrower would not get finance without taking the cover, the Competition Commission decided that businesses faced little to no competition when it came to this sector, which meant that consumers who did want the cover were often getting a raw deal.

It has now been confirmed by the Competition Commission that is has made a provisional decision to ban the sale of payment protection insurance alongside most forms of finance and credit. A number of lenders have launched an attack against the ban, stating that this will cause undue inconvenience for customers that want to take out some form of cover. However, after the banks challenged the initial decision the Competition Appeal Tribunal stated that the ban should in fact go ahead.

The Competition Commission stated: ‘Overall we concluded that PPI providers are overstating the loss of convenience that would result from the introduction of a prohibition on selling PPI during the credit sale.’