Barclays’ PPI appeal under consideration
by Gill Montia
Story link: Barclays’ PPI appeal under consideration
A case in which Barclays is appealing against restrictions on the sale of payment protection insurance (PPI) begins today.
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 the cover frequently mis-sold.
Following a Competition Commission enquiry, the sale of single premium PPI alongside a loan was banned in May.
Barclays was in agreement with the move, as single premium PPI involved the premium for the whole of the loan period being folded into the debt and accruing interest.
However, a ban on the sale of PPI alongside a loan is due to come into force in late 2010 and Barclays has disputed some of the findings in the Commission’s enquiry and challenged 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.
The case is now being considered by the Competition Appeal Tribunal.
The Competition Commission, which has the backing of the Financial Services Authority, has promised to defend its position vigorously.
Consumer group Which? has fought a lengthy battle over PPI sales and its chief executive, Peter Vicary-Smith, suggests: “Rather than appealing the Competition Commission’s decision, Barclays should concentrate its efforts on developing protection products that offer better cover and value for money to its customers.”
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