Measures Announced to Stop Retail PPI Providers Ripping Off Consumers



Payment Protection Insurance providers in the retail sector could be forgiven for thinking they'sd been overlooked when it comes to sanctions on selling policies, as they weren'st included in the Competition Commission'ss remedial measures to secure better deals for consumers, suggests PPI lobbyist Sara-Ann Burgess from Burgesses (http://www.burgesses.com).

The Commission announced its proposed remedies for credit providers earlier this month, but omitted the retail sector from its report. Instead it released its provisional decision on remedies for retail PPI providers on 21 November with similar recommendations.

Retail PPI is a small part of the overall payment protection market and relates to protecting repayments for shopping through home catalogues. As is the case with other types of PPI, the cover pays a monthly income to meet bills should the policyholder become unemployed, have an accident or fall sick.

The Commission concluded that, in line with the wider sector, PPI is highly profitable for distributors, they have a considerable point-of-sale advantage, there'ss little competition between providers on price and customers have few opportunities to switch products or search for alternatives.

Proposed remedies include;

>    Selling PPI separately to merchandise cover (where distributors offer both).

>    Banning the sale of PPI within 14 days of the distributor selling credit to the customer. This addresses the point-of-sale advantage and gives customers opportunities to compare products and providers (in turn encouraging greater competition). Although the distributor cannot re-contact a customer for 14 days, customers can proactively contact the distributor and purchase a policy 24 hours after the credit sale.

>    Providing a 'spersonal PPI quote's, clearly stating the price of an individual PPI policy and its cost when added to the credit product. If this is not given at point of sale, the credit provider must do so when contacting the customer to offer PPI.

>    Publishing certain information and messages in PPI advertisements, such as the price of PPI, expressed in a common format of monthly cost per 's163;100 of benefit, as well as monthly cost of PPI per 's163;100 outstanding balance, plus a reminder that PPI is optional and available from other providers.

>    Sharing policy information with the Financial Services Authority for use in PPI comparison tables and also with Office of Fair Trading and wider public.

>    Producing annual PPI statements containing similar information to the personal quote and encouraging customers to review their policies. This will make any switching decisions easier.

Sara-Ann comments: I'sm delighted to see that home shoppers will also be protected by these recommendations and in future, will be able to make an informed decision as to whether the policies offered by numerous catalogues are a good deal. It would be easy for the retail PPI sector to fall through the net with so much attention focused on the banks and building societies.

However, for many people catalogue shopping is a way of life and I hate to think how many customers are being ripped off by unscrupulous providers.

Although the proposed remedies closely match those recently published, there'ss no need for a ban on single-premium policies, as all retail PPI policies are covered by monthly premiums.

Sara-Ann concludes: Whilst these measures deal with the anti-competitive practices, they will not immediately lower the extortionate premiums currently offered by home shopping PPI providers.

Inevitably, as competition widens, costs will come down, however, I urge people to shop around now - there are numerous independent PPI firms who offer more comprehensive cover at a fraction of the price.

Independent provider British Insurance charges 's163;3.40 per 's163;100 for unemployment cover, 's163;3.90 per 's163;100 for accident, sickness and unemployment and 's163;1.90 per 's163;100 for accident and sickness. It recently scooped a series of awards from magazines and websites for its products, services and for treating customers fairly.

The Competition Commission is asking for interested parties to feedback on its proposals by 12 December and is looking for them to be implemented within 12 months.

http://www.burgesses.com





Measures Announced to Stop Retail PPI Providers Ripping Off Consumers