The British Insurance Brokers Association (BIBA) has written a letter dated 24 June 2010 responding to the Competition Commission’s (CC) provisional decision of 14 May 2010 in relation to how Payment Protection Insurance (PPI) is sold. Following the appeal by Barclays and others to the Competition Appeals Tribunal as to the lawfulness of the CC imposing the package of remedies, the CC carried out further work and concluded that:

i) in the context of personal loan PPI, mortgage PPI, credit card PPI and second charge mortgage PPI, the benefits of a point of sale ban as part of the package of remedies outweighed the disadvantages; and
ii) in the context of retail PPI, the CC could not be sure that the package of remedies including a point of sale ban would be substantially effective.

For the full report setting out the CC’s provisional decision click here.

In its letter BIBA welcomed the CC’s provisional decision and confirmed its view that PPI remains a valuable product to meet the protection requirements of customers. BIBA has been working with others in the market to develop an optional, annually renewable, flexible solution that meets the CC’s requirements. BIBA believes there is an alternative product to offer consumers which it has identified as ‘Committed Payments’ to include an ‘Unemployment Cash Plan’ and which can be promoted exclusively through the BIBA membership. BIBA also sought clarification from the CC that the point of sale ban would not be extended to catch lenders working with brokers who provide an expert protection referral service to their customers.

The CC will publish its final decision on the package of remedies in July 2010.