Painfully slow progress on PPI
Deep in the headquarters of every bank in the UK there must be a war room dedicated to the protection of products that work against customer interests. It is from here that the banks orchestrate their campaign to maintain sky-high overdraft charges in the face of massive opposition. But the bankers in these bunkers are also fighting a less-publicised but even more dogged campaign: to preserve the cash cow that is payment protection insurance (PPI).
PPI policies sold in conjunction with loans are often vastly overpriced, riddled with exclusions and difficult to claim against. Worse still, many policies are sold without the borrower even realising because they are bundled in with the cost of the loan. As a result, many people, often the most vulnerable in society, end up with expensive cover that they will never be able to use.
Despite the banks receiving a ticking-off from the Office of Fair Trading, a recent investigation by Which? indicates that most have not changed their ways. Thankfully, help is at hand. The Competition Commission is examining the banks’ grip on the market and is expected to insist on big changes.
Sadly, however, the investigation is nowhere near breaching the banks’ defences. Despite plenty of evidence that they are preventing, restricting or distorting competition, the commission will not even publish its “emerging thinking” until the autumn. We will then have to wait until late summer next year before it makes any recommendations. We may then have to wait another year before they are implemented.
That is not good enough. The commission may have almost 20 other current investigations, but none of them is anywhere near as important, or affects as many people, as PPI. There are 20 million PPI policies in the UK, with the industry selling seven million more every year.
The banks are ripping off consumers on an industrial scale, yet the commission does not see fit to work at a pace much quicker than the statutory minimum. The whole affair raises the question: why is there only one Competition Commission?