The Competition Commission has today released a damming report following its investigation into the Mortgage Payment Protection Insurance (PPI) market.
The Competition Commission said in its summary; we provisionally found that each credit provider and financial intermediary faces little competition for the sale of Mortgage Payment Protection Insurance (MPPI) when it is sold in combination with the credit it insures. As a result of this lack of competition, it is highly profitable to distribute MPPI.
We estimated that the 12 largest distributors of MPPI made profits in excess of the cost of £1.4 billion in 2006. We found that there were features of relevant markets which resulted in consumers facing higher prices and less choice. Not only was the matter of competition a factor in this investigation but the Citizens Advice Bureau issued a super-complaint which highlighted not only consumers paying excessively high prices for MPPI but that consumers were also often mis-sold MPPI by companies using pressure and unfair sales tactics.
The specific issues raised by the Citizens Advice Bureau in its super-complaint were varied. Its four primary areas of concern which the OFT considered were:
- consumers paid excessively high prices for MPPI;
- the protection consumers bought was only partial, and many policies unreasonably excluded common causes for default;
- consumers were often mis-sold MPPI using pressure and unfair sales tactics;
- and the administration of MPPI claims was slow and unfair, and often left consumers facing additional charges or serious debt enforcement action.
Independent experts believe that as many as seven million people may have been mis-sold Mortgage PPI 2003. Over 20 million policies exist in the UK, so there is a strong chance that many readers will have entered into one or more MPPI’s and up to a third of these could be victims of mis-selling. Of great concern is the fact that in many cases it is the vulnerable, low and low to middle income earners who are affected.
“Firstly it’s expensive and can add over £2000 to the cost of an £8,000 loan. Secondly, in many cases the policies are simply not suitable. Many people have already tried to claim against their policy only for it to be rejected due to exclusions or the small print. The MPPI providers, who include banks and loan companies, had a duty to check suitability at the time of selling the policy but in many cases this just didn’t happen. What’s worse is that in some cases customers have been pressurised into taking MPPI, believing that it would improve their chances of getting a loan.”
If you have a loan, mortgage or credit card, it is imperative that you check whether you are paying for MPPI and, if you are, whether the policy is suitable for your particular needs. If the policy is not suitable, you should question why that is. Were you given all of the relevant information when you bought the policy?
“Anybody considering a compensation claim must establish what the grounds are as these vary from case to case”. If you are unsure of what the grounds are and how the regulations apply, you can contact Anglia Credit Issues. If it is established that you have a case and you do not wish to represent yourself, you can appoint our solicitors who will handle your entire case on a no-win no-fee basis*. And considering that it may be costing you somewhere in between £2000 and £5000, on an unsecured loan of £8,000 to £13,000, or even £10,000 to £12,000 on a secured loan of £25,000 to £35,000, it could prove to be an extremely worthwhile exercise.
The author is a huge fan of Mis-sold Mortgage Payment Protection Insurance.