Article

Payment protection insurance (PPI) and mortgage payment protection insurance (MPPI) can offer great value from the right providers but there are also some very poor deals out there. Unfortunately, most of the rip-off pricing has come from banks, building societies and other loan providers who have enjoyed a distribution advantage.

Many consumers have incorrectly gained the impression that they are somehow obliged to buy their PPI or MPPI cover from the same organisation that is granting them their loan. But they are in fact entitled to shop around elsewhere with specialist providers, which can often offer cover at a significantly lower rate.

The scale of the lenders' profiteering became serious enough to warrant investigation by the Competition Commission, which concluded that an unfair advantage they enjoyed when selling PPI and MPPI with credit products had resulted in consumers being overcharged by more than £1.4 billion a year¹.

As a result the Competition Commission has introduced a package of measures to be implemented in 2010 with the aim of ending the abuse. These include a ban on the sale of PPI and MPPI during the sale of the credit product and for seven days afterwards.

This will enable consumers to pay more attention to independent providers able to offer keener pricing, higher quality cover and superior service standards. webmoney, for example, can provide immediate cover online, subject to eligibility, for both PPI and MPPI often without an exclusion period for switchers, and it charges younger people lower premiums to reflect the fact that they are less likely to claim.

¹Competition Commission