Competition Commission investigation into Payment Protection Insurance

On 24 March 2011, the Competition Commission (CC) issued its Notice of making an Order (under section 161 of the Enterprise Act) resulting from its Payment Protection Insurance (PPI) market investigation. This UK investigation began in February 2007 following a referral by the Office of Fair Trading (OFT). Over the course of its investigation, the CC found there to be an adverse effect on competition in the market and developed a package of remedies. Its decision was appealed by Barclays Bank PLC through the Competition Appeal Tribunal (CAT), which referred the case back to the CC for reconsideration of the proportionality of its intended point-of-sale prohibition.

Following further analysis and representation from parties, the CC considered its remedy to remain appropriate to the competition concerns that it had found. The CC’s Order now contains: a point-of-sale prohibition on providers of PPI who also sell the underlying credit, a requirement to provide a personal quote to consumers, a requirement to include additional information in marketing materials, a requirement to provide information (e.g. on claims ratios) to third parties, a recommendation on the use of price comparison tables, a prohibition on the selling of single-premium PPI policies and the introduction of a process of annual reviews for customers.

DotEcon advised a leading international bank over the course of this investigation, on the various assessments undertaken by the CC and the likely impact of the remedies.

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