The selling of
payment protection insurance (PPI) to those taking out personal loans and
mortgages has been restricted, an industry watchdog has confirmed.
PPI has long been treated with suspicion by consumer groups, which have accused lenders of mis-selling the product to many consumers.
Some customers discovered they could not even make a claim under the terms of their PPI, while others were told it was an obligatory part of taking out a loan.
Under the new regulations out lined by the Competition Commission, lenders will no longer be able to propose PPI at point of sale, and will have to wait seven days before offering the product to their customers.
The group acknowledged that it may be slightly inconvenient for customers who wanted PPI from the outset, but maintained that the majority of consumers would be better protected.
Peter Davis of the commission said: "These reforms will mean that PPI providers will, in future, face real competition where there is currently little.
"And, in consequence, the prices consumers currently pay for PPI will fall significantly."
The
Financial Services Authority has already taken action against 24 companies for the mis-selling PPI.
