Barclays Bank contests Payment Protection Insurance (PPI) ban

The Competition Commission (CC) recently published its report on Payment Protection Insurance (PPI). Barclays is now contesting part of this which bans lenders selling PPI at the same time as a loan.

The CC requires all firms to stop selling single premium PPI after 1 October 2010.

The CC also banned firms from selling PPI at the same time as a loan, at the point of sale of the loan.

Instead those firms making a loan or credit offer must wait a week before they can sell PPI to the borrower.

It is this that Barclays are appealing against.

PPI generates significant revenue for British Banks and whilst no doubt they want to support the CC findings, they clearly also want to make sure they retain revenue.

PPI is sold to borrowers to cover their loan repayments in the event that they lose their income through sickness or unemployment.

There are many providers of PPI who can provide the insurance independent of the loan provider. This can often lead to significant savings.

By choosing a standalone PPI provider it means as long as you pay the monthly premium you will be protected under the terms of the policy you have taken out.

If you manage to pay off the loan or mortgage earlier than expected, you can cancel the PPI policy and save money.