Last week the Competition Commission announced that it was banning the sale of Payment Protection Insurance or PPI at point of sale in order to try and increase competition and reduce the cost of this type of cover, which has been causing controversy for some years. This was a provisional decision from the Competition Commission, and was welcomed by many.

However, one industry official has expressed concern that this ban on PPI at point of sale could actually adversely affect some customers, as it could mean that they are left unprotected and uncovered should anything go wrong. Finance journalist Lorna Bourke said that Britons could be left at greater risk as a result of this ban because they would have no cover in place.

The Competition Commission has already tried to ban PPI in the past, but some of the major banks appealed against this and their appeal was upheld. The ban on point of sale PPI could affect customers who do not bother or think about taking protection out elsewhere but will also affect the lenders themselves who could lose out because of the ban.

PPI is designed to cover repayments for the policyholder for a set period of time in the event that they cannot make repayments due to sickness, injury, or redundancy. However, these policies hit the headlines after investigations showed that the policies had often been mis-sold to those that did not want them, did not need them, and in some cases were not even eligible to claim on them.

Ms Bourke stated: “There is a real danger that banning all PPI policies sold alongside a mortgage or personal loan could result in borrowers having no protection at all. This could mean homebuyers losing their homes if they are unable to meet repayments.”