Payment Protection Insurance Overcharges

Article published on 4th June 2008

The Competition Commission has revealed that consumers are being overcharged to the tune of £1.4 billion a year for payment protection insurance (PPI).

Peter Davis, the Competition Commission's inquiry chairman has said: “We've found serious problems with the payment protection insurance market and consumers are paying for the lack of competition. The way PPI is sold as an 'add-on' to a loan or other credit product means distributors escape the pressure they should face from competing suppliers.”

This sort of insurance policy is very often sold alongside credit cards to cover payments that cannot be met due to loss of income in loss on It is calling for consumers to be given better information on PPI, but the Competition Commission is considering creating a cap on prices for PPI's and even a ban on them altogether when sold in conjunction with credit cards.

Aside from the issues surrounding payment protection insurance's sold along with credit cards, the Competition Commission is planning to introduce means to make it easier for consumers to change PPI providers if they want, which will include a ban on ‘single premium policies’, where the cost of the entire policy is put onto a single bill in advance and repayments are taken out of monthly bills.

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