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The Actuary The magazine of the Institute & Faculty of Actuaries

Competition Commission imposes delay on PPI sales

Banks must wait seven days before they can sell customers payment protection insurance (PPI) according to a Competition Commission crackdown. The new rules come into force in 2010 and will not allow banks to offer PPI at the point of sale, or provide single premium policies. Lenders have also been ordered to provide “improved information” to customers.

The Competition Commission’s report into the £3.8bn-a-year PPI industry slammed firms for over-charging customers. “These are significant measures carefully designed to address the serious competition problems that exist in this market,” said Peter Davis, the commission’s deputy chairman and chairman of the PPI inquiry. “The pointof- sale advantage has meant leading providers have faced little competition for PPI and, as a result, have charged persistently high prices.”

However industry bodies warned that the new rules may hurt consumers. Nick Starling, director of general insurance and health at the ABI, said: “The ABI believes the point-of-sale ban carries significant risks for borrowers, mainly by leaving them unprotected at a time when unemployment cover has never been needed more.”