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Lack of competition in PPI, says Commission
10 October 2008 16:11
A lack of competitors in the payment protection insurance (PPI) sector is leading to high consumer prices, the Competition Commission has concluded.
The watchdog found that difficulties for PPI providers in entering the market were one of the main causes of this.
An insurance product that is often sold along with a credit agreement, a PPI is designed to prevent borrowers from falling into further debt should their payments become unfeasible due to health problems or unemployment.
A statement from the Competition Commission stated that consumers were paying higher prices than they normally would in a well-functioning market, while distributors enjoyed high profitability.
However, the Commission added, it did not find that high prices for PPI were significantly distorting prices for credit or retail goods.
One suggestion by the Commission was that PPI ceased to be a point-of-sale service, instead becoming a separate product.
Earlier this month, the FSA.gov.uk">Financial Services Authority fined Alliance and Leicester £7 million for miss-selling its PPI plans.
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