Watchdog calls for reform of retail PPI market

LONDON (Reuters) - The competition watchdog said on Friday the market for retail payment protection insurance (PPI) needed improving and suggested remedies aimed at boosting competition and aiding consumers.

The Competition Commission said its proposals closely matched those published last week for the rest of the PPI market, which included a ban on the active sale of PPI within 14 days of a distributor selling credit to a customer and also measures aimed at making the costs of PPI clearer.

The retail PPI market is a small part of the overall PPI market and relates to protection taken out on repayments for shopping through home catalogues.

The watchdog said there were two differences from its proposals for the broader PPI market.

Firstly, distributors would have to offer retail PPI separately from merchandise cover.

Secondly, there is no ban on single-premium policies, where PPI is paid in one lump sum, because all retail PPI policies are paid monthly.

In 2007, the gross written premium (GWP) paid by customers for retail PPI was 73 million pounds, compared with 4.5 billion pounds for all other forms of PPI.

The Competition Commission said it wanted to hear from all interested parties about its proposals by December 12 before making a final decision.

(Reporting by Mark Potter; Editing by Chris Wickham)