The Competition Commission has announced that single-premium payment protection insurance (PPI) is to be banned, among a raft of other measures to improve competition in the PPI market.
Lenders will no longer be able to sell single-premium payment protection insurance (PPI), the Competition Commission (CC) has decided.
The move follows a resolution by five of the country's biggest banks to no longer sell the product by the end of this month. Consumer group Which? had also called for an outright ban.
PPI is aimed at helping borrowers pay off their loans in the event that they lose their job or become unable to work. The single-premium version requires the full premium to be added to a loan up-front, which increases the amount of interest payable, as well as removing the ability to switch policy.
The CC's announcement was part of a raft of measures aimed at improving competition in the PPI market, and deputy chairman Peter Davis - who chaired the inquiry into the practice - explained that this was why single-premium policies were being banned.
"We will... make it easier for consumers to switch their PPI policy at a later point if a better deal becomes available. This is why we are banning single-premium policies, which lock-in customers to their current provider to a significant extent," he said. "Annual statements will also help remind consumers how much their policy is costing and of their ability to switch, while other elements of our remedies package will help them to find whether there are better-value policies available to them."
The CC said that its recommendations should come into force during next year.
