The ban on debt insurance sales in its current form cannot go ahead, a tribunal has ruled.
In a setback for borrowers, the Competition Appeal Tribunal partially upheld an appeal by Barclays against a curb on the selling of payment protection insurance (PPI) cover within a week of the sale of a credit product.
The appeal follows the Competition Commission's (CC) three-stage crackdown on poor sales practices, which often leads to misselling (see the PPI Reclaiming guide for free template letters).
The CC has been told it will have to resubmit its proposals to ban early PPI sales. The clampdown, which was due to be implemented next year, was first announced in January (see the PPI sales banned MSE news story).
The chief problem, the tribunal stated, was that the CC initially failed to consider consumers' "loss of convenience" from a ban.
PPI protects loan and credit card repayments if you cannot work (see the Loan Insurance guide to find cheap cover).
Martin Lewis, MoneySavingExpert.com creator, says: "It's a shame Barclays has succeeded in using its lawyers to delay the implementation of such an important ruling.
"We desperately need a stop to this 'auto-sales' process where commission-based bank staff try and push borrowers into getting these policies. Let's hope the commission manages to get through all the legal loopholes to help it protect consumers.
"Bank-based PPI is a near con and hideously over-expensive. Billions of pounds of it have been missold, and the sooner it's cleaned up and cleared out the better."
A Barclays spokeswoman says: "We have always held that the ban limits rather than enhances customer choice which is why it formed the main focus of our appeal."
The CC's original plans included:
- A ban on sales by firms for seven days after selling a loan or credit/store card product. This is what Barclays was protesting against.
- A ban on sales where the premium for the term of a loan is charged upfront and incurs interest. Most lenders have now stopped such sales.
- Other measures to improve the information available to consumers to make it easier to compare products.
The CC had been pressing ahead with the clampdown despite the appeal. It began a consultation to determine how it will implement the proposed measures in July (see the PPI clampdown continues MSE News story).
Further reading/Key links
Get your money back: PPI reclaiming
Cheap cover: Loan insurance
Official judgment: Tribunal result