The UK Office of Fair Trading has referred the country's payment protection insurance market to the Competition Commission for further investigation, after a period of public consultation confirmed that its previously identified competition concerns still warrant investigation.
The Office of Fair Trading (OFT) commented that complaints from businesses, consumer organizations and trade associations made the investigation necessary. It added that, although it recognizes the work that the UK Financial Services Authority (FSA) is doing to ensure that consumers are treated fairly, both bodies agreed that FSA action alone could not remedy the problems in the payment protection insurance (PPI) sector.
John Fingleton, OFT chief executive, commented: Despite some evidence of a degree of consumer satisfaction with aspects of the product, the evidence as a whole suggests consumers get a poor deal.
It was a complaint lodged by Citizens Advice in 2005 that prompted the OFT’s investigation into PPI. This ‘super-complaint’ suggested that the features of the PPI market seriously harmed the interests of consumers because of excessive prices, unfair sales tactics and slow claims administration.
Sue Edwards, senior policy officer for Citizens Advice, commented on the decision saying: We’re pleased that the OFT has now referred the UK PPI market to the Competition Commission but we need swifter action to protect consumers.
The OFT’s decision met with a mixed reaction from the industry. Angela Knight, chief executive designate of the British Bankers’ Association, commented: The OFT themselves say that consumers are satisfied with the product and our concern is that the continuous adverse comments are in danger of discouraging the very people who would benefit from it the most. Consumer watchdog Which?, however, supported the move, as did the British Insurance Brokers’ Association.
Mr Fingleton concluded: This referral will enable the Competition Commission to undertake a thorough investigation of the market and, if necessary, ensure that appropriate remedies are put in place.