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New rules for lender sold payment protection insurance

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The Competition Commission (CC) has published the final order detailing measures to introduce competition into the payment protection insurance market.


Peter Davis of CC says, "Insurance to cover periods of unemployment, sickness and following accidents can serve a significant need. CC has worked hard to document the serious failings of competition in PPI markets and subsequently establish a package of significant market interventions whose aim is substantially to improve the operation of these markets. The culmination of all of that work is a legally binding document which sets out a framework of rules designed to encourage greater competition in future and hence better outcomes for consumers.”


  • A prohibition on selling PPI at the point of sale of the credit until after seven days after the credit sale or, if later, seven days after the supply of a personal PPI quote

  • An obligation to provide a personal PPI quote, setting out the cost of PPI along with details of the cover provided

  • An obligation to provide information in marketing material about the cost of PPI and key messages, for example making it clear that PPI is optional and available from other providers

  • An obligation to provide information about claims ratios to any person on request.

  • A prohibition on the selling of single-premium PPI policies

  • An obligation to provide an annual review setting out the cost of PPI and including a reminder of the consumer’s right to cancel


The order takes effect from 6 April 2011, though the main obligations will be introduced in two phases to coincide with annual government common commencement dates (6 April and 1 October) for new legislation and regulations and also to allow sufficient implementation time for providers. Some of the information requirements will therefore come into force on 1 October 2011 and the point-of-sale prohibition and other measures on 6 April 2012.

Income protection insurance news: 4 April 2011

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