Barclays Wins Loan Insurance Case

Mon, 19 Oct 2009

Barclays has won a landmark case against the Competition Commission regarding the sale of payment protection insurance (PPI) alongside loans . The Competition Commission had banned the sale of the controversial insurance alongside personal loans or credit cards, though that decision has now been reversed by the Competition Appeal Tribunal.

Barclays lauded the decision as a victory for consumer choice, though there are fears that banks will once again be able to slot in the insurance to a loan agreement for an inflated fee. The Competition Commission had hoped to impose a seven day waiting period after any loan agreement before banks could contact customers about loan insurance .

The ban on the sale of payment protection insurance alongside loans had contributed to an increase in interest rates as banks and lenders seek to restore their profit margins as they were no longer able to extract profits from the sale of PPI . Indeed, more than 10 per cent of Barclays global profits derived from the sale of the cover.

The appeals tribunal claimed the commission had failed to provide sufficient evidence that a ban would increase competition.
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