A ban on the sale of debt insurance at the same time as credit cards and loans moved a step closer today.

Providers will instead have to wait for seven days in most cases after selling a credit product before they can flog the insurance, after the Competition Commission (CC) re-drafted plans to prohibit immediate payment protection insurance (PPI) sales (see the PPI Reclaiming guide).

The Commission also wants to ban the sale of single premium PPI policies, in which the cost for the entire term of the policy is paid upfront and therefore incurs interest, though this is virtually extinct anyway.

The CC's re-drafted plans, still at a preliminary stage, are similar to measures announced last year that were successfully appealed by banking giant Barclays.

The Commission was ordered to reassess its plans for a point-of-sale ban after the Competition Appeal Tribunal said the watchdog had failed to take into account the impact the ban would have on consumers.

The only difference this time is that the point-of-sale ban will not apply to PPI sold via catalogue merchants, but this only accounts for 2% of the market, according to the CC.

The CC is also introducing a package of measures to boost competition in the market, including personal PPI quotes for consumers, annual statements on the cover and better information to make it easier for people to shop around and switch provider.

Final decision to come

The Commission will consult on these proposals before publishing its final verdict in July.

Inquiry chairman Peter Davis says: "We found that many customers would place very significant value on being given the time and space to choose the right PPI product, or indeed to decide that PPI is not right for them.

"We also found a significant number of customers appreciate the convenience of buying PPI instantly at the point of sale of credit. Overall, we concluded that PPI providers are overstating the loss of convenience that would result from the introduction of a prohibition on selling PPI during the credit sale."

The initial investigation was triggered by the systematic misselling of PPI by banks and other lenders.

In some cases, the Financial Ombudsman Service, the independent complaints arbitrator, upholds all PPI complaints made against some firms.

Wendy Alcock, MoneySavingExpert.com money analyst, says: "It’s time the banks stopped fighting the PPI battle and dealt with their customers' complaints fairly, quickly and under the Competition Commission's rules.

"It's important the millions who've been missold a hideously expensive, and often pointless, product still claim their money back. Everyone who's ever bought one of these policies should check to see if they're due their cash back."

A Barclays spokeswoman says: "We are disappointed the CC's provisional decision maintains the proposal to prohibit PPI from being sold at the point of credit sale.

"We know that PPI is a product that is of value to many people. In these times of economic uncertainty, adequate financial protection is more important than ever."

Further reading/Key links

Get your money back: PPI Reclaiming
Cheap cover: Loan Insurance