Plan accused of limiting customer choice

The payment protection insurance (PPI) market was plunged into confusion again this week when the Competition Commission (CC) indicated it might climb down from its ban of policies being sold alongside loans.

The commission’s comments followed a ruling from the Competition Appeal Tribunal (CAT) in response to a case brought by Barclays Bank. The CAT ruled on Friday that the commission must review its proposal to stop lenders selling PPI to customers applying for loans and credit cards. It said the plan could limit customer choice.

The commission had said providers would have to wait seven days after agreeing loans before contacting customers to sell them the insurance.

A spokesman for the commission said: “The judgment has not questioned our findings on the lack of competition in this market. The CC has proposed a package of remedies and the judgment affects one element of that package.

“The appeal was upheld on one ground which relates to … prohibiting the sale of PPI at the point of sale of credit. The CC has been asked to reconsider the loss of convenience for consumers.

“We will study the judgment closely before deciding our next steps.”

Paymentshield insurance director Neil Galjaard said his company welcomed the commission’s review of the ban.

“We have always been of the belief that customers should have freedom of choice and be able to shop around for the best value product – but equally we believe that customers should be able to buy protection at the same time they take on debt.”

He said that introducing a time lapse between arranging credit and then buying a PPI policy from the same company meant that there was a risk that the customer might not take protection cover at all. That would leave them exposed in an uncertain economic environment.

The ABI declined to comment.