The Competition Commission is finally looking to get its teeth into the con trick of payment protection insurance (PPI), as it issued a statement yesterday calling for a ban on sales of the policies when people take out loans and credit cards.
The Commission wants banks to wait for 14 days before approaching borrowers to sell PPI, and wants to ban financial providers increasing interest paid by charging for the entire cost of a policy at the start of a loan.
Martin Lewis, the personal finance campaigner, estimates that half of the policies in force may have been mis-sold (estimated to be worth £10BN).
Needless to say the Association of British Insurers isn't best pleased, and claimed that the Commission would "kill the PPI market".
So what?
The policies rarely pay out (the Competition Commission said only 14% of premiums are returned to policyholders, compared with 54% for home insurance and 78% for car insurance) so what is the point of them?
The Competition Commission is currently conducting an inquiry into the sale of PPI alongside credit agreements and recently recommended that providers are forced to wait 14 days before they contact a customer to offer them the cover.
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