A crackdown on the sale of loan insurance has been proposed by the Competition Commission.It says that the controversial payment protection insurance (PPI) should not be sold to a customer within 14 days of being sold a loan.PPI should ensure that people can still repay loans such as mortgages or credit card bills if their income falls if they lose their job or fall ill.It has been mis-sold in the past, with customers unaware they were buying it.The sale of this insurance has been under sustained attack from consumer groups for the past three years, who have described it as little more than a "protection racket".ComplaintsRecently the Financial Ombudsman Service (FOS) demanded that the Financial Services Authority (FSA) take action to stop banks fobbing off customers who had complained to them about PPI being mis-sold.It said this had led to it receiving a deluge of complaints from the public.The FOS is still getting 100 complaints a day, far and away the biggest source of grievances.In its first report earlier this year the Competition Commission estimated that the public paid PPI premiums in 2006 amounting to £4.4bn, most of which went to the banks and other financial institutions who sold the policies rather than the underwriting insurers.Of the £3.5bn worth of the insurance sold by the 12 largest sellers, £1.4bn was "excess profit", in the Commission's view.The FSA has been taking an increasingly strong line against firms found guilty of mis-selling PPI, and earlier this year it fined the Alliance & Leicester bank £7m after it found that the lender's staff had pressurised customers into buying PPI polices that they did not want or need.The Competition Commission said it was putting out today's recommendations for a final round of consultation.A final decision will not be made until the publication of its final report in the New Year.
