Last January, following a two-year investigation into the UK PPI market, the Commission concluded that credit providers and intermediaries face little or no competition when selling PPI products to their credit customers.
The report outlined a package of remedies, including a 'point of sale' ban that will prevent providers selling PPI at the same time as a loan or credit product, a prohibition on all PPI paid for by a single premium and new rules to improve the information given to customers so that they will find it easier to shop around for the right product.
Under the new regime, customers will receive a personal quote setting out the cost of the PPI product on its own and when added to the credit product and an annual review of their policy. Marketing and advertising material will include the price of the product in a common format and make it clear that PPI is optional and available from other providers.
PPI providers also will be required to provide information on their PPI policies to the Financial Services Authority for inclusion in the regulator's price comparison tables and to the Office of Fair Trading (OFT) for monitoring purposes. Large providers will have to commission an annual, independent mystery shopping exercise and report the results to the OFT.
In addition, all PPI providers will have to provide information about their aggregate claims ratios for the previous year to any person who requests it.
The Competition Commission would like to see these remedies in force by October 2010. On 8th July it took the first formal step towards implementation by publishing a draft order for consultation.
But in March this year, Barclays Bank launched an appeal before the Competition Appeal Tribunal challenging some of the Commission's findings – in particular, its decision to introduce the point of sale ban.
Barclays argues the Commission had no proper evidential basis for deciding the ban was justified or that it would be a more effective and proportionate solution than other remedies, such as an extended cooling-off period.
The appeal, in which Barclays is supported by Lloyds TSB and Shop Direct Group Financial Services Limited, has been listed for hearing on 7th September, but the Competition Commission has decided in the meantime to press ahead with its consultation exercise.
Peter Davis, Competition Deputy Chairman said:
“By continuing with the necessary preparations like this, we can hit the ground running once the appeal is finalised and we have considered the [Competition Appeal Tribunal's] judgment.
"If the CAT supports our findings, taking these steps now will help ensure there is no unnecessary delay in resolving the significant competition issues that we found in this market and in delivering a better outcome for consumers."
PPI providers and other interested parties wishing to comment on the proposals will have to act quickly. The consultation closes on 7th August.