New rules on selling PPI
The Competition Commission has announced a series of measures it hopes will give consumers a fairer deal on payment protection insurance. The sale of the payment protection insurance will be completely banned when sold alongside credit agreements. The ban will come into effect in 2010. It has also halved the amount of time from 14 to 7 days that companies can contact customers to offer the insurance.
The sale of the single premium policies or PPI, where the cost for the whole of the term of the policy is paid upfront and usually added to the debt taken out will also be banned. The policies cover debt repayments for those unable to work due to an illness or accident.
The measures will also include providing the customer with better information to help them make a decision on the validity of the policy, its price and cover and annual statements.
In the Commission’s final report it said the majority of the UK’s 12 million PPI policies were purchased by consumers at the same time they took out credit cards, loans or credit agreements and they were not aware that they were able to purchase the insurance with another provider. The Commission felt that it was a disadvantage to the customers other providers who were not able to offer a comparable price. This was the main reason why consumers where being over charged for the cover. Providers must make it clear to consumers that the cover is optional and can be purchased from other providers.
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