In my opinion

A report on the selling of payments protection insurance at point-of-sale has generated more questions than answers, particularly on MPPI as it is unclear what constitutes the actual point-of-sale for the product


Conflicting news came out last week as different interpretations were put on the results of a detailed survey carried out by GfK. It found that while customers welcomed the opportunity to think about taking out payment protection insurance at the point-of-sale they were unlikely, in practice, to search for alternatives.

The Competition Commission report published in January is open for consultation until July, when final recommendations will be made.
But it is clear that there are significant questions on the proportionality of the proposals, and on the possible adverse effects such a ban could have by leaving many individuals with exposed liabilities due to their own inertia.

I think we all understand the heavy-handed approach taken in banning single premium PPI which has been open to abuse for many years with hefty commissions generated by large premiums being added to loans and mortgages. But to ban the sale of PPI completely at point-of-sale is disproportionate.

Following a complaint by Barclays and Lloyds Banking Group, the Competition Appeal Tribunal asked the CC to review the plans, especially whether or not a wholesale ban would create more inconvenience for customers through not being able to take out PPI at the same time as a loan.

The CC concluded that the providers were overstating the loss of convenience from a point-of-sale

In a further study carried out by the CC it concluded that while many customers appreciated the convenience of being able to take out PPI at the same time as the loan, a significant number of customers also valued to time to think about the purchase.

The ultimate conclusion arrived at by the CC was that the providers were overstating the loss of convenience that would result from a ban of PPI at the point-of-sale. In other words – tough, we’re doing it anyway.

Interestingly, the CC has been quiet on the subject of mortgage PPI in the context of the proposed ban. After going to great lengths to confirm that MPPI was indeed part of the proposals, it has given no real clarification on the practical application of such a ban.

For example, what constitutes point-of-sale in respect of a mortgage? Is it the signing of the application, the issuance of the mortgage offer or completion? Many advisers will discuss protection needs throughout the sales process with their clients, so it is not clear at which point a ban would apply.