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Daily Insurance Industry News
Saturday 23rd of June 2018
September 7, 2009

Barclays challenges restrictions on PPI sales

by Gill Montia

Story link: Barclays challenges restrictions on PPI sales

Restrictions on the sale of payment protection insurance (PPI) due to come into force next year, are being challenged by Barclays.

PPI is frequently sold alongside unsecured loans to provide cover for repayments if the borrower loses their job or becomes too ill to work.

For years, consumer groups have claimed that the market is uncompetitive and the cover frequently mis-sold.

Following a Competition Commission enquiry, the sale of single premium PPI alongside a loan was banned in May.

Single premium PPI was notoriously costly because the cost of the cover was included in the loan and therefore subject to interest.

However, a ban on the sale of PPI alongside a consumer credit agreement is due to come into force next autumn and Barclays is disputing some of the findings of the Commission and challenging the scope of the market definition set by the body.

The Competition Appeal Tribunal will begin hearing the case today and the Commission, which has the backing of the Financial Services Authority, has promised to defend its position vigorously.

The chief executive of consumer group Which?, Peter Vicary-Smith, has commented: “Rather than appealing the Competition Commission’s decision, Barclays should concentrate its efforts on developing protection products that offer better cover and value for money to its customers.”

 

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