Barclays and Lloyds are battling the Competition Commission following its ban on 'point of sale' loans insurance.
The decision of two high street banks to challenge a recent finding from the Competition Commission has been criticised by Which?
According to the consumer group, the actions of Barclays and Lloyds TSB over Payment Protection Insurance (PPI) are not justified. The Commission had ruled that selling PPI "at point of sale" was no longer allowed for banks - and it is this decision which is being disputed.
In its response to the news, Which? also drew attention to the fact that Lloyds TSB was bailed out by the government last year as it struggled in the credit crunch and is now part-nationalised, saying that the firm's behaviour was "outrageous" in the light of the taxpayer-backed rescue.
PPI is a kind of loans insurance that offers the buyer protection against making repayments in case of sudden life changes, such as job loss. It has been consistently criticised by groups such as Which? for being mis-sold, offering poor value for money for customers and for being sold "as default" alongside loans, credit cards and insurance rather than as a separate product carrying separate premiums and other costs.
The Commission's decision to ban sale of PPI at point of sale came about due to this latter objection. Figures from Which? suggest that two million people have been sold loans insurance which they would never be able to claim on - and that total PPI overcharging for customers comes to around £1.4 billion a year.
Which? said in a statement: "It's outrageous that a taxpayer-backed bank is challenging the Competition Commission for the right to sell a rip-off product to the very taxpayers who bailed it out. Barclays and Lloyds should focus their energies on developing decent products that offer genuine, affordable protection.
"PPI has been dissected and discredited through numerous investigations and FSA fines and the Financial Ombudsman continues to uphold the majority of complaints in favour of the customer. We can't understand why Barclays and Lloyds seem intent on swimming against the tide."
