Money News: PPI providers 'are still failing their customers'

Payment protection insurance (PPI) is to be investigated by the Competition Commission after the Office of Fair Trading (OFT) decided that the cover is "failing consumers".

The OFT has been probing the £5.5bn industry since April - liaising closely with City regulator the Financial Services Authority (FSA) - following a "super-complaint" lodged by Citizens Advice.

PPI is sold with loans, credit cards and mortgages and is designed to fill the breach if the borrower is unable to make repayments because of accident, sickness or unemployment.

The problem is that policies can be overpriced as well as mis-sold, often using high-pressure sales tactics, to people for whom they have little or no value. The self-employed, for example, may find their claims are rejected, as may people who have to leave work because of back pain; exclusions like these are often buried in the small print of the policies

"It is clear that many consumers are failed by PPI," said the OFT's chief executive, John Fingleton. "It gives customers a poor deal and often less protection than they think."

While banks and other lenders have taken limited steps to improve the situation, the OFT said these measures would "not make major improvements to competition in the market".

The OFT found that consumers did not shop around for the best deal on PPI, and that the complex nature of the cover made it difficult to make comparisons between policies.

There are other concerns that the big banks dominate the market. Small, standalone PPI rivals can't apply the competitive pressure needed to bring standards up and prices down.

On top of this, the OFT found evidence of a low claims-to- payouts ratio, compared with other insurance products.

In a separate report last week, the FSA found that some PPI providers "are still failing to treat their customers fairly" by not giving clear information during sales conversations - including how much a policy will cost. Buyers might also remain unaware that certain medical conditions are excluded, and some firms don't collect enough information from the customer on any policies already held that might overlap with PPI.

Equitable Life: Policyholders left in compensation limbo

A long-awaited report into the near-collapse of insurer Equitable Life has been delayed until next year after "critical evidence" was handed over late in the day by government officials.

Parliamentary Ombudsman Ann Abraham is investigating whether there was maladministration in the regulation of Equitable by government departments.

The insurer was plunged into difficulties after losing a legal battle in the House of Lords over the rights of some policyholders - leaving it with a £1.5bn liability.

If Ms Abraham finds evidence of maladministration, she can recommend that the Government pay compensation to policyholders.

But in a letter sent to MPs last week, Ms Abraham said that late, "extensive" evidence from the Government needed further examination. Her findings, due for publication next month, are now expected to come out in May.

The Ombudsman said she had "seen nothing to suggest this was anything other than the result of a misunderstanding".

The delay is disappointing news for thousands caught up in the collapse. Ms Abraham's report is seen as one of the best hopes for policyholders seeking compensation after the insurer closed its doors to new business in 2000.

The European Parliament has also opened an investigation into whether the UK Government failed in its role as regulator to protect Equitable policyholders.

Financial prospects: Clouds gather for 'Maggie's children'

Children born during the Margaret Thatcher years are an "unlucky generation" whose lives will be blighted by huge debts, spiralling house prices, delayed retirements and poor pensions, according to a new report from a Tory think-tank.

The report, 'What Future for Maggie's Children?', examines the effect her policies will have on those born between 1980 and 1995 - and how these people will fare in the next 50 years.

Policy Exchange, in partnership with Age Concern, has compiled a series of essays outlining the bleak prospects for this age group - who will struggle with student debt and ever-inflating house prices. It also says they might not be able to afford to stop working when they reach their sixties due to poor pension provision, and that many will be living alone because of family breakdowns.

The report warns that without big changes in government policy, "Maggie's children" will face much greater pressure than their parents' generation.

"What is needed is a major adjustment - in housing, pensions, savings and education - to keep up with economic and demographic change," said Roger Gough, Policy Exchange's research director.

The think-tank recommends the setting-up of lifetime savings accounts with top-ups from government, and tax credits to grandparents who provide childcare.

Regulation: Watchdogs unite to help consumers

A trio of consumer watchdogs for the postal and energy industries are to merge into a new, unified body: Consumer Voice.

The Government has proposed that Energywatch, Postwatch and the National Consumer Council (NCC) become one organisation to give consumers a single point of contact for problems and queries.

"This is about getting people a better deal for their money and protecting them from being ripped off," said Ian McCartney, Consumer Affairs minister.

This announcement follows a public consultation launched in January this year.

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