UK lenders are to be banned from selling customers payment protection insurance (PPI) alongside credit products such as personal loans.
The Competition Commission yesterday confirmed it will introduce a point-of-sale PPI prohibition as part of a package of reforms designed to make the PPI market more competitive.
The decision confirms a provisional ban issued by the Commission in May after it investigated PPI selling practices. Lenders will now have to wait seven days before offering PPI to their customers.
Peter Davis, the Commission’s deputy chairman, said the changes “will introduce competition which is likely to bring substantial benefits to customers in terms of lower prices, better products and more choice”.
“We have come to a clear view that, overall, customers will benefit significantly from the market reforms we propose introducing for PPI products,” Davis added.
Several banks are delaying processing some customers’ claims for refunds on PPI products while a challenge of the complaints review process is heard.
The British Bankers’ Association has brought a judicial review against city watchdog the FSA over new guidance to make banks review claims by its current business conduct standards as well as those applicable at the time of sale. PPI is sold to cover borrowers’ loan repayments if they fall ill, die, or lose their jobs.