The Competition Commission has slammed the £5.4BN payment protection insurance (PPI) industry in a report issued this morning.
The Competition Commission states that consumers are paying more than £1.4BN a year too much for PPI; it also noted that banks, mortgage and credit card providers made it difficult for customers to compare PPI policies or switch to change their insurance.
Up to 7.5 million policies are taken out every year, with about 14 million policies active at any one time.
Peter Davis, deputy chairman of the commission, is quoted in The Times:
"We've found serious problems with the PPI market and customers are paying for the lack of competition. The way PPI is sold as an add-on to a loan or other credit product means that distributors escape the pressure they should face from competing suppliers".
Mr Davis has recommended a ban on selling PPI at the same time as a loan, or even within a fixed time after the loan, is taken out.
This is yet another nail in the coffin of the reputation of Britain's beleaguered financial services industry.