Defaqto’s latest report, “Payment Protection Insurance - 2008  - The party’s over ” predicts that over the next two years there will be a  massive upheaval in the industry as lenders, underwriters and consumers are forced to adjust to consequences that will flow from the judgements of the Competition Commission.With an annual turnover of around £4.5bn and profits in the order of £1.5bn the industry is likely to suffer a severe dilution of profits when the Competition Commission’s statement of remedies is published. If this includes de-coupling the sale of PPI from that of the credit product, this in itself would have a huge impact on the industry. 

As a consequence of the inevitable tightening of the rules under which PPI can be sold, costs and charges across a wide range of other financial products and services will have to rise steeply if banks and credit card companies are to fill the holes in their balance sheets that this will create.

PPI products principally cover protection for loans, credit cards and mortgages but there are significant differences in the way the products are costed and sold. So, while the shortcomings of the PPI industry are well-documented, particularly in connection with the complexity of the products, the sale process itself, the sale to people not covered by the policy and the high cost of some plans, these findings do not apply universally.

PPI policies can and do provide a vital income stream to meet ongoing bills if accident, sickness or unemployment does strike and calls by newspapers and lobby groups to policyholders to cancel their policies could leave them seriously exposed if this advice were followed.

Commenting on the industry, Brian Brown, Head of Insight and lead author of the report said: “We must be very careful not to throw the baby out with the bathwater. PPI has been exploited by lenders as an easy source of profit, but the products themselves can be an extremely valuable.

Policyholders need to carefully examine their personal circumstances and their policy wordings and form a judgement as to whether to retain them, seek cheaper alternatives or drop them altogether.

PPI is the first safety net people fall back on before being forced to claim state benefits and PPI’s detractors should think carefully before advising people to cancel their policies unless they are prepared to accept responsibility for policyholders left unprotected by their advice.”

-Ends-

Notes to Editors:

¹The report “Payment Protection Insurance - 2008  - The party’s over ” is on sale priced £1,200 excluding VAT for a PDF version and £595 (No VAT payable) for a single printed copy. For further information please contact Chris Johnston on 01844 295457, or the Sales Department on Freephone 0808 1000 804 or visit http://www.defaqto.com/

 For further information contact:

Defaqto Limited 

Brian Brown, Chris Johnston or Luci Mylward

01844 295 454

Despite many European resorts reporting excellent skiing conditions, things can still go wrong when you take to the slopes. Equipment can go missing, pistes can be closed or avalanches can disrupt  travel arrangements, so skiers are advised to check the cover offered before buying winter sports travel insurance, says Defaqto.Single trip insurance cover can either be purchased as a standard winter sports policy, but can also be obtained by adding on the winter sports option to an ordinary single trip policy. If you do this, you can expect to pay the same again for the privilege. Skiers planning to go skiing more than once a year should consider an annual policy.

If an avalanche delays departure to or from your resort, nearly 80% of policies pay some level of compensation, with around one in five paying £200, around one in ten paying £500 and one paying a massive £1,000.

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