Sales ban closer on payment protection insurance

Providers will instead have to wait for seven days before they can contact customers to sell them the insurance after the Competition Commission upheld an earlier ruling it made on plans for a point-of-sale prohibition.

The decision follows an appeal by Barclays, which argued that the proposed ban was not justified by the evidence collected by the commission and failed to consider the inconvenience that could arise for consumers.

The commission is also banning the sale of single premium PPI policies, in which the cost for the entire term of the policy is paid upfront and usually added to the debt taken out.

It is also introducing a package of measures to boost competition in the market, including personal PPI quotes for consumers, annual statements on the cover and better information to make it easier for people to shop around.

The commission was ordered to reassess its plans for a point-of-sale ban after the Competition Appeal Tribunal said the watchdog had failed to take into account the impact the ban would have on consumers.

PPI covers repayments on credit products if the borrower is unable to make repayments due to accident, sickness, unemployment or death.

It is sold to cover a variety of financial products, but more than 90 per cent of PPI sold in the UK relates to unsecured personal loans, credit cards, mortgages or secured loans.

The ban does not cover PPI sold in relation to repayment on shopping through home catalogues.

Inquiry chairman Peter Davis said: "Overall we concluded that PPI providers are overstating the loss of convenience that would result from the introduction of a prohibition on selling PPI during the credit sale."

Mr Davis added: "All customers of course will appreciate the lower prices for PPI and the greater choice we expect to result from more competitive PPI markets."

The commission will invite comments on its decision before publishing its final verdict in July.