A new rule change has introduced restrictions on the sale of Payment Protection Insurance, which could hit dealer sales process and profit streams.
The Competition Commission has introduced the changes, to address what it perceives as a lack of competition in the PPI market. It means that loan providers, and retailers who provide loans, will be restricted in how and when they sell PPI products.
The rules, which come into force in October 2010, mean car dealers cannot actively sell PPI within 7 days of selling a vehicle on finance.
However, a customer can approach the dealer about PPI after 24 hours.
Confused? Imagine how bewildered customers are going to be, said RMIF director Sue Robinson.
‘Putting the onus on customers to shop around for these products is actually more likely to lead to customers being uninsured rather than to them obtaining a better deal.
‘The Competition Commission’s approach is heavy handed. In the current climate, customers want reassurance that, if they buy a car on finance, they are able to meet the repayments if they are made redundant.’
She is far from impressed. ‘This decision could lead to customers inadvertently leaving themselves without this vital form of insurance, and prevents dealers from effectively doing their job when it comes to finance provision.’
The implications could spread even further too, she warned. ‘This could impede the recovery in the car market.’
This week’s change will not, we’re sure, be the last we’ll hear of the story…