MSE News: Competition Commission reignites PPI sales ban plans

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"A ban on the sale of debt insurance at the same time as credit cards and loans moved a step closer today ..."

Read the full story:

Competition Commission reignites PPI sales ban plans

marshallka

Nice one Wendy

Wendy Alcock, MoneySavingExpert.com money analyst, says: "It’s time the banks stopped fighting the PPI battle and dealt with their customers' complaints fairly, quickly and under the Competition Commission's rules.

WombleSW20_2

I'm not fan of the banks but this vendetta on the creditor insurance market has become ridiculous. I work in the insurance indusry and the 'remedies' they have implemented will already be very effective in achieving its objectives of reducing mis-selling and profit margins of banks. This latest POS ban will kill off the product altogether. I admit the industry has a tainted history but this step is too far and will leave many customers with no protection on their loans at all. People like to talk about all the mis-elling and fat profits made by banks (not insurers!) but what about those indebted individuals who would have delared themselves bankrupt if it wasn't for this type of protection? Sheer myopic stupidity!

Alpine_Star

WombleSW20 wrote: »

I'm not fan of the banks but this vendetta on the creditor insurance market has become ridiculous. I work in the insurance indusry and the 'remedies' they have implemented will already be very effective in achieving its objectives of reducing mis-selling and profit margins of banks. This latest POS ban will kill off the product altogether. I admit the industry has a tainted history but this step is too far and will leave many customers with no protection on their loans at all. People like to talk about all the mis-elling and fat profits made by banks (not insurers!) but what about those indebted individuals who would have delared themselves bankrupt if it wasn't for this type of protection? Sheer myopic stupidity!

All it'll mean is that only the people who genuinely want it will buy it - either after 7 days or from another provider. I'd like to know how many bankruptcies have been caused by having this expensive and largely useless product forced on to them. It has done far more harm than good.

marshallka

WombleSW20 wrote: »

I'm not fan of the banks but this vendetta on the creditor insurance market has become ridiculous. I work in the insurance indusry and the 'remedies' they have implemented will already be very effective in achieving its objectives of reducing mis-selling and profit margins of banks. This latest POS ban will kill off the product altogether. I admit the industry has a tainted history but this step is too far and will leave many customers with no protection on their loans at all. People like to talk about all the mis-elling and fat profits made by banks (not insurers!) but what about those indebted individuals who would have delared themselves bankrupt if it wasn't for this type of protection? Sheer myopic stupidity!

Its is not that people don't want insurance but what was ever wrong with the banks/brokers etc offering standalone policies that are cancellable at any time and also have no interest payable on them? Single premiums were never good value choose what. They were only profitable for those that sold them. Also lots of people given these policies were already covered elsewhere or could never use them anyway. IMO something needed doing.

WombleSW20_2

Alpinestar - your comments focus on single premium experience which we all know had a tarnished reputation. SP is gone now so let's move on. You can not compare SP with monthly or annual products as they are chalk and cheese. This is the crux of the issue.

I am certianly not defending Single Premium PPI - it offered super-normal profits which led to mis-selling. Most people who work in financial services agree upon this fact. However the abolition of single premium plus annual statements plus FSA tables is more than enough drive competition and reduce excess profits. Add the FSA rules around regulated sales and what you have is a regulated sales process in a competiive market place. Removing the product at POS takes away the convenience on when to buy product and in most cases customers won't buy 7 days later. You're left with uninsured, highly indebited customers with little knowledge on where to find protection for their loan.

As far as customer's taking after 7 days - these will be few and far between, and those who go looking for it are more than likely to make a claim imminently. The net effect is that the industry will have no appetite to offer unemployment related protection products altogether, or if they do, it will be unaffordable. How can this benefit the consumer, especially in the current climate?

Alpine_Star

WombleSW20 wrote: »

Alpinestar - your comments focus on single premium experience which we all know had a tarnished reputation. SP is gone now so let's move on. You can not compare SP with monthly or annual products as they are chalk and cheese. This is the crux of the issue.

I am certianly not defending Single Premium PPI - it offered super-normal profits which led to mis-selling. Most people who work in financial services agree upon this fact. However the abolition of single premium plus annual statements plus FSA tables is more than enough drive competition and reduce excess profits. Add the FSA rules around regulated sales and what you have is a regulated sales process in a competiive market place. Removing the product at POS takes away the convenience on when to buy product and in most cases customers won't buy 7 days later. You're left with uninsured, highly indebited customers with little knowledge on where to find protection for their loan.

As far as customer's taking after 7 days - these will be few and far between, and those who go looking for it are more than likely to make a claim imminently. The net effect is that the industry will have no appetite to offer unemployment related protection products altogether, or if they do, it will be unaffordable. How can this benefit the consumer, especially in the current climate?

My comments were not focussed on SP.

The ban will only prevent providers offering PPI for the 7 days after the point of sale and you can bet a cotton chomping dollar that from day 8 consumers will be made relentlessly aware of the provider's PPI offering, so it's hardly likely to inconvenience the consumer.

It is not for the banking or insurance industries to make judgments on what is in the consumer's interest.

Call me reckless but given the clear bias of a banking industry who's reputation and integrity is currently on par with that of bottom feeding fish versus the considered view of the Competition Commission, I'll take a gamble and plump for the CC.

hellyphant

I went into Barclays Bank the other week to LOWER my overdraft. I walked away happy with the service but then days later recieved a letter in the post confirming my overdraft insurance cover!!

This was never even discussed and I have and would never take out any insurance of this manner.

I complained to Barclays and they took my complaint but I had to make a separate phonecall to cancel the cover which annoyed me.

I then received an apology letter telling me this was a known 'bug' in their computer system that was automatically adding this insurance when any changes were made to an overdraft.

Disgusting!!

marshallka

hellyphant wrote: »

I went into Barclays Bank the other week to LOWER my overdraft. I walked away happy with the service but then days later recieved a letter in the post confirming my overdraft insurance cover!!

This was never even discussed and I have and would never take out any insurance of this manner.

I complained to Barclays and they took my complaint but I had to make a separate phonecall to cancel the cover which annoyed me.

I then received an apology letter telling me this was a known 'bug' in their computer system that was automatically adding this insurance when any changes were made to an overdraft.

Disgusting!!

Blimey, Seems like they had the same bug for years then. Perhaps a new computer system is needed then and for them to put to death their old one (euthanasia is sometimes called for lol). It seems to recur so often their bug and some bugs cannot be cured!!!

Glad you got it sorted..