The Competition Commission moved one step closer towards a clampdown on the Payment Protection Insurance (PPI) industry yesterday, voicing its concerns that in some cases lenders are charging more for PPI than they are for the interest on consumer loans.
Publishing its emerging thinking – nine months after the launch of its investigation into the PPI industry – the commission said it was still concerned that there may not be enough competition in the retail market, suggesting consumers may not be being given enough choice when buying loan insurance.
"After examining a substantial amount of evidence, we think there are some areas that we need to explore further," said Peter Davis, the chairman of the inquiry, and deputy chairman of the commission. "We are far from making up our minds, but we are focusing on the amount of competition for PPI that distributors face at the retail level. It is clear that the decision of whether or not to take out PPI is an important one and that customers must balance the benefits of insurance against its cost. The evidence we have seen suggests that the cost of PPI is in some instances higher than the interest paid on loans."
Mr Davis said he was aware of the importance and size of the PPI industry – which takes several billions of pounds worth of premiums every year – and the urgency of many consumer group's concerns. However, he said it was important that the inquiry was thorough, and said the provisional findings would not be published until May.
The commission's inquiry has been working in parallel with an investigation by the FSA, which has been underway for over two years. At its latest update in September, the FSA complained that standards were still falling short of the regulator's expectations, warning that it would strengthen its action against companies that did fall back in line with its sales rules.