PPI firms defend product

Major players in the payment protection insurance market have defended the sector despite a damning report on it from the Office of Fair Trading.

The OFT issued a report on the PPI market last week following a super-complaint from Citizens Advice last September.

The report highlights numerous problems in the sector including poor product value, inflated profits, a lack of transparency in the sales process and problems for consumers trying to compare and contrast policies.

But industry pundits say that while they welcome the report, consumers should not confuse PPI with mortgage payment protection insurance.

Chris Traynor, sales and marketing director at Paymentshield, says: “It is healthy that we are highlighting the fact that the PPI market is uncompetitive and provides poor value for consumers. Hopefully this report will force that side of the industry to provide consumer-friendly products.

“It also highlights that PPI is everything that MPPI is not. With MPPI what you see is what you get, whereas PPI is unclear. The report should help to make it clear to consumers that these are two distinct products.”

David Lane, regional manager for Western Europe at Genworth, says: “We welcome this report and appreciate the need for it. We are considering the contents and realise there are some questions that must be addressed.

“But it is important that the significant benefits of PPI are not overlooked. PPI provides a financial safety net which is needed at the moment with repossessions and bankruptcy figures at record highs. And the fact that it eases the government’s welfare burden by cutting arrears and helping prevent bankruptcies should not be ignored either.”