PPI has very little competition says Competition Commission
PPI or Payment Protection Insurance has been at the centre of controversy for some time, with investigations revealing that in many cases this costly insurance cover was being mis-sold to consumers who did not want it, did not need it, and could not even benefit from it in some cases. PPI is a type of insurance cover that is sold alongside finance such as loan or credit cards, but it was revealed that many lenders were using persuasion tactics to sell it, making consumers believe that they had to take it, or were even adding it onto agreements without the consumers’ knowledge.
The PPI market has now been criticised by officials from the Competition Commission, who have claimed that there is little competition between providers and the cover is netting a lot of profit for providers. The Competition Commission has said that the lack of competition between providers meant that consumers did not get the chance to find a better or more affordable deal elsewhere.
It is thought that credit card companies and banks are overcharging consumers to the tune of £1.4 billion a year in respect of PPI, and the commission is looking at different ways in which the problems with PPI can be tackled. The Financial Services Authority has already been tackling the problems by imposing hefty fines to the tune of millions of pounds in some cases for the mis-selling of the insurance.
The FSA recently carried out a mystery shopper exercise, and it was revealed that many PPI providers were failing to provide details of the cover to customers and were also being pushy about making the customer take the insurance cover out.
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