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Billion pound burden of point-of-salePPI finally lifted - Competition Commission proposed remedies herald new era of financial freedom for borrowers

No more smoke & mirrors on vital protection products for borrowers Millions more will now be able to buy peace of mind at a price they can afford Ban on front-loaded single premium PPI will put borrowers back in control Major loss of revenue stream for lenders may result in raised rates for borrowers

BORROWERS will finally get the financial freedom they so desperately need following the Competition Commission’s long-awaited proposal to ban PPI at the point-of-sale and single premium PPI*, says independent PPI provider

“The major obstruction to consumers getting a fair deal on payment protection insurance has finally been blasted out of the way – a decision that should have been made long before now but one that is very, very welcome,” says’s Shane Craig.

“Lenders’ ability to sell their own PPI at the same time as a loan has been one of the single most unfair financial practices of recent years and has cost consumers billions of pounds.”

A survey conducted by last year** revealed that, on average, customers had saved over £2,700 by choosing the independent provider’s PPI instead of their lender’s own – a clear indication of who’s been the winner here.

“This is money that borrowers will never get back. Some determined consumers with the time and energy to pursue the matter will no doubt be successful in reclaiming PPI charges that are deemed to have been unfair, but for the majority it’s a write-off.

“And it’s not just those who have paid way over the odds for High Street PPI who have lost out,” says Craig.

“There’s also all the borrowers who wanted protection for their loans but didn’t take it because they couldn’t afford their lender’s premiums and didn’t realise there was an affordable independent alternative. Those who subsequently lost their income and fell into arrears as a result will have suffered unnecessarily, some possibly on a major scale.”

This is terrible timing for lenders who are already struggling to cope with huge credit crunch losses, not to mention the potential iceberg of the High Court ruling on bank charges lurking ahead.

The downside of this decision may be that lenders will raise their loan rates to compensate for the loss of earnings from PPI sales***, but the consumer remains the winner from today’s decision, says Craig.

“Now that this major hurdle has been cleared the next crucial message to get across to borrowers is that PPI is – and always has been – an essential personal finance product.

“In today’s troubled times borrowers need to be more careful than ever before that they have a financial safety net in place. With unemployment now at its highest level for a decade the spectre of redundancy is ever-present and isn’t choosy who it affects,” he adds.

“At last, borrowers will be protected by the Competition Commission’s decision from being unfairly treated. The next step on this long and winding road is for them to be made aware that they have the choice to buy PPI from an independent source.”

* Competition Commission Provisional Decision on Remedies to the PPI Market, 13 November 2008
** customer survey, July 2007
*** The Competition Commission reported that lenders made between £2.2bn and £2.6bn a year from the sale of payment protection insurance – January 2008