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New restrictions on the sale of payment protection insurance (PPI) will mean dealers will not be allowed to sell it at the same time as finance packages, warned the RMIF.
The change follows a ruling today by the Competition Commission which it said addressed a lack of competition in the PPI market.
The move, described as “heavy handed” by the RMIF, will restrict the sale of PPI products by loan providers and retailers who offer loans. Under the rules dealers will be unable to actively sell PPI within seven days of selling a vehicle on finance, although a customer may approach a dealer after 24 hours to buy the product.
The new rules will take effect in October 2010 with the information requirements implemented in April 2010.
While the move is intended to promote competition, Sue Robinson, RMIF director, believed the decision could leave customers without insurance.
“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,” she said
“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.
“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. This could impede the recovery in the car market.”