Competition Commission Concerned By Mis-Sold PPI
The Competition Commission is concerned about the manner in which people are being sold insurance, alongside items purchased on credit, such as furniture, clothes and electrical items.
The problem is to do with the lack of competition between providers, in relation to price. Customers are not granted the ability to look for alternatives, and also to switch products. The providers really do have a massive point-of-sale advantage.
A payment protection insurance (PPI) policy is designed to cover the payment of debt, in the event of a policy holder becoming sick, unemployed, or involved in an accident. It has been a while now, that bank advisors and pushy shop assistants have been getting criticised for mis-selling such policies.
The biggest fine in relation to PPI, was charged to Alliance & Leicester, who have been accused of making the most serious breaches. They got fined �7m, as they were not elucidating to customers that such cover is optional, and were also training staff to sell the cover in an extremely pushy manner. HFC Bank, which is a subsidiary of HSBC, was fined �1.09m by the FSA, for failing to treat customers correctly when selling PPI.
It was only last week that Which? Revealed that PPI was still being sold by certain companies, that are making out that PPI is compulsory. Now the Financial Ombudsman has got involved, writing to the FSA,. After receiving a massive 500 complains in one week, relating to PPI.
It was the Competition Commission last year, who said that banks relied on PPI to make loans profitable. �1,200 can be made on a policy that costs just �20 to sell.
A major problem is the fact that PPI costs far too much, in relation to a loan. But also, people get sold the policies, when they do not even qualify for being able to make a claim. People employed part time, or on short term contracts, for instance.
The OFT has been investigating PPI for the last year, and they ended up referring the matter to the Competition Commission. The reason for this is that they feel the market is full of problems. Specifically, it restricts competition in a way that puts the consumer at a disadvantage.
It will not be until next year that the Competition Commission publishes its findings, and until then, consumers are just going to be vulnerable against such terrible sales tactics.
Should you feel that you have grounds for complaint, in relation to a PPI policy that you have been sold, then you need to firstly speak to the company that sold you the policy. Should this fail to resolve the situation, you will then need to refer your complaint, free of charge, to the Financial Ombudsman Service. They have a fact sheen that can be viewed online.