Consumers 'overcharged' for payment protection insurance

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Consumers 'overcharged' for payment protection insurance

Consumers 'overcharged' for payment protection insurance

Consumers are being overcharged by over £1.4 billion a year for payment protection insurance (PPI), a report claims.

The Competition Commission's provisional findings following a 15-month investigation said that companies faced "little or no competition" when selling PPI.

PPI covers repayments on products bought by credit if the borrower becomes unable to maintain them due to accident, sickness, unemployment or death.

Consumers buy most PPI policies when they purchase the credit product and so cannot compare prices and are also hindered by complex policies and pricing, the Commission found.

Inquiry chairman Peter Davis said many customers did not realise they could get PPI elsewhere, possibly cheaper, and that some believed buying it from the provider increased the chance of getting a loan.

Solutions proposed by the Commission include banning credit point of sale PPI, a temporary price cap on PPI premiums and improving information given to customers.

Alan Davis, competition law specialist at Pinsent Masons law firm, told the company’s legal advice website out-law.com that the price cap proposal was “an unusual and highly interventionist remedy for the Commission to propose”.
ADNFCR-323-ID-18640623-ADNFCR

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