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OFT PPI PROBE WELCOMED – BUT PAYMENTCARE WARNS THAT MORE CONSUMERS LIKELY TO FALL INTO EXPENSIVE HIGH STREET LENDERS’ TRAP

ONLINE payment protection insurance provider Paymentcare.co.uk applauds today’s launch of the Office of Fair Trading’s investigation into the PPI market – with reservations.

Paymentcare.co.uk has long campaigned for a fair deal for consumers routinely ripped off by high street lenders and welcomes this long-awaited – and much needed - initiative.

“The OFT’s intentions on its proposed market study into PPI make very welcome news,” said Paymentcare.co.uk managing director Shane Craig.

“However, it’s rather disappointing that it does not expect to publish its report until the end of 2006. Consumers need action now.”

The dominance of the PPI market by High Street banks and loan providers has meant that for years consumers have been paying vastly inflated premiums for policies that may even prove useless in the event of a claim. This is why Paymentcare.co.uk has pressed the OFT to take action to break the link between point of sale borrowing and PPI.

“Banks and loan providers are constantly bombarding consumers with unbelievably low APRs to encourage more borrowing but they aren’t so vocal on the rates they charge for their PPI cover – and it’s not hard to see why,” added Craig.

Also disappointing is the fact that today’s announcement by the OFT did not acknowledge that mortgage payment protection insurance (MPPI) should not be tarred with the same brush as loan PPI, as stated by the FSA in November 2005.

Mortgages account for 83% of consumer borrowing but the fact that MPPI accounts for only 17% of consumer spend on PPI overall proves that there’s a huge disparity in PPI sales aligned with personal loans and credit cards.

“By continuing to mention MPPI alongside over-priced loan PPI offered by High Street lenders, it’s no wonder that there is a growing misunderstanding of the two in the minds of consumers,” said Craig.