OFT decision on PPI is Overdue
Tuesday, March 27th, 2007The Office of Fair Trading has referred Payment Protection Insurance (PPI) market to the Competition Commission. However, they have taken no action. The industry is starting to complain, claiming that a decision is ‘long overdue’. The PPI market grew 19 per cent a year since 2000.
A recent USwitch study showed that consumers are overpaying up to £3,973 too much when buying a PPI with a loan. There is a remarkable difference between the cost PPIs from independent providers, bank, or building societies.
USwitch’s director of financial services Nick White claims that banks charge five times more than independent providers, citing examples that show how consumers can save than £3,000 simply by switching their PPI provider.
Nick White commented: ‘It’s not surprising to see that the Competition Commission is now involved in this investigation as the high street banks and building societies currently account for 80 per cent of all PPI policies sold. This is mainly because consumers are not shopping around and looking at the standalone policies which represent much better value for money.’
USwitch is one of the firms that called for the Competition Commission to take action. They want lenders to adjust percentage rates to make it easier for consumers to see the difference in their loan cost before, and after a PPI is included.
Consumers should ask for a loan quote, before and after, a PPI is included. They should also become wary if the loan officer uses high pressure, or unfair sales tactics to sell the PPI. Some sites suggest that most consumers are never give a clear cut total of their PPI, resulting in many loan customers believing that their PPI is much lower than normal.
