uSwitch.com comments

on the Competition Commission's provisional findings on the Payment Protection Insurance (PPI) market announced today

Simeon Linstead, Head of Personal Finance at uSwitch.com, the independent price comparison and switching service, comments on the Competition Commission's provisional findings on the Payment Protection Insurance (PPI) market announced today: "The Competition Commission's findings focus on consumer education which is the core issue surrounding PPI.

Consumers do not shop around for PPI - the majority of the 14 million people who do have this cover buy it from their credit provider.

PPI has an important role to play, protecting consumers if they cannot afford to repay debt.

This is particularly relevant in today's "credit crunch climate." "At present, there are several standalone providers of PPI, including Helpucover from Cardif Pinnacle, and Paymentcare, whose products offer much better value for money than those sold by credit providers.

Encouraging consumers to shop around and compare products will open competition in the market and, we hope, drive down the price of PPI.

Our analysis shows that consumers could be paying as little as ?211 per month (for PPI cover on repayments of ?700 a month) by taking it out with a standalone provider.

The same level of cover with a mortgage provider costs double this, at almost ?422 per month.

"We are pleased that the Competition Commission is also addressing the inability for some PPI customers to switch policies with ease, particularly those who have been sold a single premium policy.

These products are never cost-effective and are often difficult and expensive to exit".

Linstead concludes: "The debate around PPI has been raging for some time.

In fact, it was 16 months ago that the Office of Fair Trading referred the investigation to the Competition Commission.

While we broadly welcome the Commission's findings and proposals, we hope that the next stage of the consultation commences in a shorter timescale so that consumers can benefit from a more competitive and fairer market sooner rather than later.

"While we support the shake-up of the PPI market, we still have concerns over the knock-on effect it could have on loan APRs.

The high cost of PPI charged by loan providers is clearly subsidising the low loan rates on offer.

The threat of a clampdown on PPI policies will result in a steady increase to interest rates.".

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