4 April 2006
The Office of Fair Trading (OFT) has announced that it is to begin an investigation into the payment protection insurance (PPI) sector after receiving a complaint about the product.
Citizen's Advice (CitA) issued the OFT with a super-complaint at the end of last year.
PPI is offered to anyone taking out a loan in order that their repayments are covered should they be unable to pay back the loan themselves due to illness, unemployment or if they have an accident.
According to the OFT, between 6.5 and 7.5 million PPI policies are taken out each year.
Yet there are suspicions that the PPI sector is not working to the benefit of consumers, as they can find it difficult to gain information about the products and alternative providers.
A wide variety of pricing also exists and the OFT will also examine the barriers stopping greater competition in the PPI market.
Its investigation will involve a detailed survey of consumers and will consult lenders, insurers and intermediaries.
The findings of the market study are expected to emerge by the end of the year.
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