The move, which excludes store card PPI, comes after the OFT decided that its concerns over the sales process, lack of consumer understanding, and the lack of competition had not been sufficiently addressed within the consultation period.
John Fingleton, chief executive of the OFT, 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 PPI market and, if necessary, ensure that appropriate remedies are put in place.”
The Council of Mortgage Lenders (CML) and the Association of Mortgage Intermediaries had campaigned for MPPI to be excluded from the referral.
However, the OFT claimed that ‘while some of the features may be less marked for MPPI, they still exist and the evidence points to a need for MPPI to be examined further’.
Michael Coogan, director-general of the CML, said: “MPPI is a vital safety net for many households and this referral sends out entirely the wrong message to consumers. We are disappointed that the unique position of MPPI has been ignored by the OFT.”
Shane Craig, managing director of Paymentcare.co.uk, added: “The referral of PPI is a good thing and what we need to come out of this is the delinking of PPI from the sales process. However, I’m disappointed it has lumped MPPI together with other PPI products. At a time when consumer debt and repossessions are rising, the last thing we want or need to see is consumers turning their backs on a valuable method of protecting their mortgage.”
