COMPETITION
COMMISSION News Release (28/08) issued by COI News Distribution
Service. 10 October 2008
The Competition
Commission (CC) has today published its provisional findings
report on retail Payment Protection Insurance (PPI).
Retail PPI is a small part1 of the overall PPI market relating to
protection taken out on repayments for shopping through home
catalogues. Although part of the ongoing investigation into the
whole PPI market, the CC decided in June (when it published its
provisional findings on the rest of the market) that it needed
further information before reaching its provisional findings on
this sector.
The report concludes that, as with other types of PPI policy,
retail PPI is highly profitable for distributors and there is
little competition between providers on price and other factors,
limited ability for customers to search for alternatives or switch
products and a considerable point-of-sale advantage for the providers.
The CC has also published a Notice of Possible Remedies for
retail PPI, inviting views on how best to remedy the problems
identified. The notice includes most of the remedies consulted on
for other types of PPI policies, as well as a possible requirement
to sell retail PPI separately from merchandise cover.
The full provisional findings report on retail PPI and notice of
possible remedies are both available at: http://www.competition-commission.org.uk.
The CC would like to hear from all interested parties about the
documents by the following dates:
* Notice of Possible Remedies for retail PPI: 31 October 2008; and
* provisional findings on retail PPI: 10 November 2008.
To submit evidence, please email: PPI@cc.gsi.gov.uk or write
to:
The Inquiry Secretary
(PPI
investigation)
Competition Commission
Victoria
House
Southampton Row
LONDON
WC1B 4AD
Notes for editors
1. The CC is an independent public body, which carries out
investigations into mergers, markets and the regulated industries.
2. PPI covers repayments on credit products if the borrower is
unable to do so due to loss of earnings as a result of accident,
sickness, unemployment or (in many cases) death. PPI is sold to
cover a variety of financial products, but over 90 per cent of PPI
sold in the UK in 2006 was either: personal loan PPI, credit card
PPI, mortgage PPI or second-charge mortgage PPI.
3. Enquiries should be directed to Rory Taylor on 020 7271 0242
or rory.taylor@cc.gsi.
gov.uk.
4. The members of the PPI inquiry group are Peter Davis (Group
Chairman and CC Deputy Chairman), John Baillie, Christopher
Bright, Professor John Cubbin and Richard Farrant.
5. The OFT referred the PPI market for investigation by the CC in
February, following its initial study into the sector in response
to a 'super-complaint' from Citizens Advice. Under the
Enterprise Act 2002, the OFT can make a market investigation
reference to the CC if it has reasonable grounds for suspecting
that competition is not working effectively in that market.
6. Following such a reference, the CC carries out a comprehensive
investigation, so that it can ultimately come to a final decision
about whether any features of the market prevent, restrict or
distort competition and, if so, what action might be taken to
remedy these.
7. Market investigation references are intended to focus upon the
function of a market as a whole rather than the conduct of a
single firm in a market. If the OFT has concerns about the conduct
of a single firm or firms that have engaged in anti-competitive
agreements, it will first consider whether those actions infringe
the Competition Act 1998.
1In 2007 the gross written premium
(GWP) paid by customers for retail PPI was £73 million. In 2006
the GWP for all other forms of PPI was £4.5 billion.