Barclays awaits payment protection decision
Published 16/10/2009 | 05:53
Barclays will find out today if it has been successful in its bid to lift a future ban on the sale of controversial payment protection insurance alongside credit agreements.
The high street bank has challenged a recent decision by the Competition Commission to ban the sale of the insurance alongside credit cards, loans and mortgages from October 2010.
Once the ban comes into force providers will have to wait for seven days before they can contact customers to sell them the cover.
In a Competition Appeal Tribunal hearing in September, Barclays argued that the point of sale ban was not justified by the evidence collected as part of the Competition Commission's investigation.
The Competition Appeal Tribunal is due to give its verdict in the case at 10.30am today.
Barclays was supported in its appeal by Lloyds Banking Group, in which the Government holds a 43% stake, and Shop Direct Group Financial Services.
It was opposed by the Competition Commission and City watchdog the Financial Services Authority.
The point of sale ban is one of a number of measures which will be introduced next year in a bid to increase competition in the Payment Protection Insurance (PPI) market, alongside changes to make it easier for people to shop around for the cover and to change providers.
The changes being implemented by the Competition Commission are expected to lead to a steep fall in the £4 billion a year that banks and insurers receive from PPI sales.
PPI covers loan repayments if the holder is unable to work due to an accident or illness or if they lose their job.
The product has been the subject of controversy in recent years after consumer groups complained it was being mis-sold to people who would never be able to claim on it, while the practice of bundling it up into loans meant that some people did not even realise they were buying it.
The FSA has already banned the sale of single premium PPI, in which the cost for the entire term of the policy is paid upfront and usually added to the debt being taken out.
The regulator has also taken action against 20 firms over poor PPI sales practices, including levying a £7 million fine on Alliance & Leicester in October last year, for serious failings in its telephone PPI sales.