Research shows consumers confused over where they can buy protection cover.
The Competition Commission has stepped up the pressure on the payment protection insurance (PPI) industry with the publication of research showing that many consumers believe they can only buy the product from their credit provider.
The report, titled PPI Search Behaviour and carried out for the commission by GfK NOP, revealed that 42% of those who took out mortgage PPI (MPII) believed they could only buy from their credit provider, as did 73% of those with personal loan PPI and 72% of those with secured loan PPI.
The report is part of the commission’s ongoing investigation into PPI, which began last autumn and is due to conclude by the beginning of 2009.
Even those who knew they could buy from another provider were prevented from shopping around by a lack of time, a preference for dealing with a company they already know, and the convenience of buying credit and PPI simultaneously.
Paymentcare.co.uk, the online broker, said that borrowers would continue to purchase inappropriate PPI while it was sold by lenders at the same time as the agreement of loans or credit cards.
Shane Craig, Paymentcare managing director, said: “The fact that the majority of borrowers who didn’t shop around for PPI believed that they had no choice but to take their lender’s own policy is clear proof that selling PPI at the same time as the loan is not in the customer’s best interests.
“Unless borrowers are made fully aware that they are completely free to buy PPI elsewhere they will continue to run the risk of being treated unfairly.”
The report surveyed a sample of 6,800 participants
There was a considerable variation in the time spent searching for policies between respondents. Eighteen per cent of MPPI customers who searched for protected loans spent less than two hours, but 36% spent more than six hours. The median length of time spent looking for protected loans was three hours.