Competition Commission step nearer to banning PPI

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The Competition Commission is pressing ahead with its proposal to ban the sale of the controversial payment protection insurance (PPI).

Under a PPI policy, an agreed sum of money is paid out each month to fully cover, or cover a percentage of the payment due on your mortgage or loan if you are unable to work, as a result of becoming unemployed or sick.

However, it was established last year that financial providers commonly boosted their profits by incorporating the cost of a one-off PPI premium into a loan.

Furthermore, many complaints were received after borrowers with PPI found themselves paying extra interest, while a significant number complained that they were unaware of having taken out the insurance policy.

It was found that millions of PPI policies were mis-sold and in September 2009, City Watchdog the Financial Services Authority (FSA), proposed a major overhaul of the rules.

Following the Commissiona��s enquiry, Barclays disputed some of the findings and consequently, the Appeal Tribunal asked the Commission to reconsider the ban or justify its position further.

As a result, the Commission has invited comments from the industry before making a final ruling in July.

Peter Davis, deputy chairman of the Commission, said the Watchdog had carried out a huge amount of work to consider whether the ban was the best way to deal with the serious problems that exist with PPI.

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