The Competition Commission (CC)’s move
to ban the sale of payment protection insurance (PPI) at the point
of sale has been successfully challenged – at least in part.
The Competition Appeal Tribunal (CAT) has ruled the
CC must revisit its decision, included in its proposed remedies
package, to impose a ban on selling PPI at the same time as a
credit agreement – known as the point of sale prohibition (POSP) –
as the CC had, in the CAT’s view, not sufficiently considered the
loss of convenience for consumers.
“[The] input of a convenience detriment into the
[CC’s] modelling could have produced a sufficiently adverse outcome
to lead to a conclusion that a remedies package which included a
POSP did not pass the proportionality test,” said the CAT.
“We therefore quash the CC’s decision to impose the
POSP as part of its remedies package, and remit that question to
the Commission for reconsideration.
“We have not, of course, concluded that the CC
could not by that process lawfully decide to include the POSP as
the result of that reconsideration,” it added.
The ban was appealed by Barclays Bank, with support
from Lloyds Banking Group and Shop Direct Group Financial Services.
The CC, meanwhile, was supported by the Financial Services
The judgement stated: “Opponents of the POSP argued
during the investigation that, since the convenience of being able
to purchase PPI insurance at the same time as the credit being
insured was a major attraction to consumers which contributed to
the level of PPI sales, the inconvenience to consumers arising from
being unable to do so after the imposition of the POSP would lead
to a reduced take-up of PPI, to the serious detriment of the PPI
The CC responded that the CAT had not questioned
its finding that the PPI market lacked competition, and noted that
the judgement did not necessarily mean that the POSP would be
overturned – merely that “the CC has been asked to reconsider the
loss of convenience for consumers of not being able to buy PPI at
the same time as taking out credit.”
Barclays said: “Barclays has always held that the
ban limits, rather than enhances, customer choice.”
The news means that motor retailers may yet retain
the ability to sell PPI alongside PoS finance – a potentially
valuable source of commission to dealers, in a time of falling
margins on car sales.
The Finance & Leasing Association said: “The
decision will ensure consumers will still be able to benefit from
the protection afforded by PPI, especially at a time of financial