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April 7, 2009

Barclays takes on Competition Commission over PPI sales ban

by Gill Montia

Story link: Barclays takes on Competition Commission over PPI sales ban

Barclays is contesting the Competition Commission’s ban on the sale of Payment Protection Insurance (PPI) alongside a consumer credit agreement and for a period of seven days thereafter.

PPI is intended to cover repayments on unsecured loans if the borrower loses their job or becomes too ill to work.

The insurance has been the subject of controversy for years with consumer groups claiming that the market is uncompetitive and that cover is frequently mis-sold.

Following a Competition Commission enquiry, changes in the way in which PPI is sold are coming into force.

The sale of single premium PPI alongside a loan must end by 29th May.

The cover is often very expensive as the premium for the whole of the loan period is folded into the debt and therefore subject to interest.

The ban on the sale of PPI alongside a loan is due to come into force in 2010 but Barclays is now disputing some of the findings in the Commission’s report, including the scope of the market definition set by the Commission.

The lender also claims the watchdog failed to take proposals made by the bank into account in coming to its decision.

However, the bank is agreeable to the ban on the sale of single premium PPI and supports some of the Commission’s other findings.

Matters will be considered by the Competition Appeal Tribunal in the coming months and the Competition Commission has promised to defend its case vigorously.

 

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