Barclays wins PPI sale appeal as watchdog must rethink ban
Barclays has won an appeal that could lead the lender to maintain the sale of payment protection insurance (PPI) alongside loans.
The Competition Commission (CC) had demanded PPI not be sold at the same time as a loan - to encourage competition and better value for money for consumers.
Instead a seven day cooling off period would be need before lenders approached customers to offer PPI.
The Competition Appeals Tribunal today quashed the decision to impose the point of sale ban as a part of ways to solve the problems over PPI.
The CC must now reconsider its plans given the judgement and is now looking at the timescale for any response.
However, this does not mean the ban is off.
"We have not, of course, concluded that the Commission could not by that process lawfully decide to include the point of sale prohibition as the result of that reconsideration."
The tribunal found some of the CC's models to establish the effects of the ban were "defective"
During the tribunal hearing it was revealed the ban on PPI would cost as much as £160 million.
The barrister representing Barclays, Thomas Sharp, said: "Denied the possibility of [buying PPI] even for 24 hours, but especially for seven days could lead and would lead to a fall in PPI product sales."
A CC spokesperson said today: "The judgment has not questioned our findings on the lack of competition in this market. The CC has proposed a package of remedies and the judgment affects one element of that package.
"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. We will now study the judgment closely before deciding our next steps."
Investigations in the PPI market found loan rates were being pushed down as lenders were able to make profits on insurance.
As consumers often do not know they can shop around - a lack of competition led to expensive policies. Further criticism came as PPI was sold to people who could not claim and it was not made clear it was optional.
This has led to massive claims for refunds from consumers.
Martin Lewis, creator of MoneySavingExpert.com, said: "It's a shame Barclays has succeeded in using its lawyers to delay the implementation of such an important ruling.
"Bank-based PPI is a near con - it's hideously over-expensive, billions of pounds of it have been missold, and the sooner it's cleaned up and cleared out the better."
He added policies were often up to 90 per cent profit.
"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 Competition Commission manages to change things slightly and get through all the legal loopholes to help it protect consumers," Mr Lewis added.
Last month, lenders were ordered to revisit the PPI complaints of 185,000 customers, as high levels of those who go on to complain at the Financial Ombudsman Service (FOS) see decision overturned.
Reforms from the CC to PPI are aimed at creating a market closer to that of car insurance - where customers shop around each year for quotes and are able to cancel cover if they wish.
The sale of single premium insurance meant this was not possible - and has now been discontinued as a part of the reforms.
A CC report last year found UK lenders made as much as £2.6 billion a year from PPI and profits of up to 982 per cent on PPI policies sold with loans.
The average revenue from a PPI policy was £1,200.
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