PPI judgement is a setback not a disaster

by Ed Bowsher on 16 October 2009  |  1 comment
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The Competition Commission must stick to its guns. The point-of-sale ban on PPI should be implemented as soon as possible.

We've had a setback today in the fight against PPI (Payment Protection Insurance). Barclays has successfully slowed down the Competition Commission's long-overdue crackdown. 

We've long campaigned against PPI at lovemoney.com. Although the cover can be useful, the insurance has been ridiculously overpriced and widely missold. 

Earlier this year the Competition Commission sensibly said that PPI should no longer be offered at the point of sale. So if you took out a loan, the lender couldn't sell you PPI for that loan at the same time. As a result, borrowers would no longer sign up for the first policy offered to them. They'd be more likely to search the whole market and get a competitive deal instead. Or decide they didn't need PPI at all. 

Today Barclays has successfully appealed against this decision at the Competition Appeals Tribunal. But the Tribunal hasn't said that the point-of-sale ban is wrong. It's just said that the Competition Commission didn't consider all the issues when it made its decision. In particular, the issue of convenience for customers. 

So the Competition Commission now has to go back, have another think, and take convenience into account. Hopefully, once it's done that, the Commission will decide that the point-of-sale ban is still a good idea.

If that happens, today's ruling will prove to be a temporary setback but not a disaster. I urge the Competition Commission to stick to its guns and reiterate its ban on point-of-sale PPI as soon as possible. I don't want to live in a world where expensive lawyers can stop the implementation of a long-overdue reform.