The Mis-selling of Payments Protection Insurance in Mortgage and Unsecured Lending Markets

Abstract

In January 2009, the UK competition law judgement body, the Competition Commission (hereafter CC), stated that the joint sale of credit or payment protection insurance (hereafter PPI) with lending, including unsecured, mortgage and credit card borrowing, was to be prohibited after 2010. This judgement also required that single premium insurance policies should not be employed in this market, demanded that greater customer information provision be provided, and required PPI to be unbundled from other financial services when sold. Although these measures were legally challenged in October 2009 by Barclays pic on the grounds that prohibiting the sale of credit insurance reduced customer convenience, they were largely upheld in a provisional decision by the Competition Appeal Tribunal, published in May 2010 (CC, 2010).