Citizens Advice delighted with OFT response to its super complaint on payment protection insurance
8th December 2005
Citizens Advice today said it was delighted by the announcement by the Office of Fair Trading (OFT) that it is launching an investigation into the payment protection insurance (PPI) market.
The announcement comes in response to a Citizens Advice super complaint to the OFT calling for just such an investigation. The PPI business has an estimated 20 million policies in force and produces annual revenue in excess of £5 billion.
Citizens Advice Director of Policy Teresa Perchard said:
"This is a clear signal that the OFT believes there is a case to answer. It is very good news indeed, and it marks the first step to a better deal for UK consumers.
"People buy payment protection insurance because they are looking for peace of mind. Given the scale of borrowing in the UK and the amount of money consumers spend on PPI, it is vitally important that they get a product that gives them this and meets their needs at a fair price.
"We would urge the industry not to wait for the outcome of the OFT investigation before reviewing their PPI products and making changes that will benefit consumers and give them a fair deal."
A report published by the charity in September which formed the basis of its super complaint described how payment protection insurance is failing many of those who need it most, adding to their debts instead of protecting them against hard times.
Protection racket* - based on evidence from 270 Citizens Advice Bureaux around the country - argued that in many cases it is more about providing an additional source of profit for the financial industry than about protecting consumers.
The report found that the insurance sold to cover credit payments in the event of illness or job loss is often very expensive, mis-sold to people who cannot possibly claim on it, and designed to exclude many of the most common situations that can lead to debt problems.
Problems occur in nearly all sectors of the consumer credit market - from non-status mortgage lenders and hire purchase companies to major high street banks and credit card companies.
Last updated: February 22, 2007