Ban Delayed on PPI Sales Alongside Loans

Fri, 21 Nov 2008

The Competition Commission has revealed it is to delay a ban on the sale of payment protection insurance (PPI) once again. The controversial insurance is sold alongside loans and credit cards, with its cost typically inflated to extortionate levels. Having begun their probe into its sale last year, the Competition Commission will now look to delay the ban of its sale alongside financial products until next year – two years after the investigation began.

The Competition Commission’s report outlines how a ban should not just cover the sale of PPI policies alongside credit agreements, but is also calling for a 14 day waiting period before firms may contact customers about the sale of PPI. Such a ban would also cover single premium policies, precluding lenders from incorporating the cost of the insurance into the amount borrowed, causing a hike in interest rate charges.

The delay has been met with anger and frustration, with the British Bankers’ Association labelling the announcement as bad news for customers, whilst the Association of British Insurers has warned that the ban could ‘kill the PPI market’, leaving millions vulnerable.

When the ban is finally implemented, however, banks are expected to raise the cost of personal loans to cover the loss of income generated by PPI sales.
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