|
News Index
Next
Previous
The OFT has signalled its intention to refer the PPI market to the
Competition Commission and has published its analysis of the market for
consultation prior to a decision early next year.
Announcing the decision, OFT Chief Executive, John Fingleton said: "Following the
work we have undertaken it is clear that many consumers are failed by PPI,
insurance which gives them a poor deal and often less protection than they
think.
"There is limited evidence the industry is taking steps to improve the
situation, but we believe they will not make major improvements to competition
in the market.
"Given our evidence and the scale of this market, our provisional view is that
it would be appropriate for the Competition Commission to investigate further".
The market study, which was launched in April 2006, examines how well
competition in the PPI market delivers choice and value to consumers.
In carrying out the study the OFT took account of views expressed by the PPI
industry, relevant trade associations and consumer organisations.
The evidence also shows that PPI has low claims ratios when compared to other
insurance products and, with no evidence to suggest costs are high, it seems
reasonable to assume that distributor profitability is sizeable.
Evidence on commission rates, which look to be high compared with other general
insurance products, reinforces this conclusion.
Martin Hall, Director General of FLA, whose members provide some £60.1 billion
of consumer finance annually, stated: "Prompt cross-industry action in response
to FSA’s findings is preferable to more regulation.
"This does however require the commitment and involvement of all concerned.
"Compliance with FSA sales rules is essential and consumers need to be able to
understand clearly the cost, scope and limitations of policies for their
particular circumstances.”
Source:
Getting Paid
|
