OFT Complaint Against Payment Protection 'Racket'

'Super Complaint' Over Payment Protection Insurance

Citizen's Advice makes a formal 'super complaint' to the OFT against the payment protection insurance industry

13th September 2005

The Office of Fair Trading (OFT) is to take a closer look at the payment protection insurance sector after receiving a 'super complaint' from Citizen's Advice. The complaint means that the OFT must make a public response within 90 days, and could lead to a full inquiry into the industry.

The consumer group said that payment protection was failing those who needed it most, and that its offices around the country had found that the insurance was often:

Very expensive
Mis-sold to those who would not be able to claim on it
Designed purposefully to exclude many of the most common reasons people would make a claim

Payment protection policies can add up to 25% to the cost of a credit agreement, and is very lucrative for banks - a recent report showed that as much as 70% of the premiums were pure profit.

Should the OFT decide to investigate, the industry could face limits on premiums and tighter controls on exclusions to make sure more people would be able to actually make a claim.

More on Payment Protection Insurance : Loans.co.uk Fined Ł455k (News, 26/10/2006), PPI Investigation to Go Ahead (News, 08/12/2005), FSA to Probe Protection Insurance (News, 25/07/2005)

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