OFT refers the PPI market to the Competition Commission

The OFT has referred the UK payment protection insurance (PPI) market to the Competition Commission (CC) for further investigation.

This decision comes after a period of public consultation following the OFT's earlier proposal to refer the PPI market to the CC on 19 October 2006.

During the consultation over 20 responses were received from parties including businesses, consumer organisations and trade associations.

Having considered the views of respondents to the consultation, the OFT is of the view that the competition concerns it identified prior to the consultation exercise remain valid and that an investigation by the CC is now warranted.

John Fingleton, OFT Chief Executive said: 'Our examination of the evidence presented to date gives us reasonable grounds to suspect that there are features of this market which restrict competition to the detriment of consumers. Despite some evidence of a degree of consumer satisfaction with aspects of the product, the evidence as a whole suggests consumers get a poor deal. This referral will enable the Competition Commission to undertake a thorough investigation of the market and, if necessary, ensure that appropriate remedies are put in place.'

In reaching this decision OFT has taken account of the work which the Financial Services Authority (FSA) is doing to remedy the problems relating to selling standards and to ensure customers are treated fairly, as well as the various industry initiatives which are underway in response to the FSA's work. However the OFT and FSA agree that FSA action targeted at selling practices alone cannot remedy the lack of competition the OFT has identified in the PPI sector.

The CC investigation is not limited to considering only the issues that the OFT has identified.