CONVENIENCE has become a byword for modern living and we all expect things to come to hand easier, faster and cheaper than ever before.
The one-stop-shop is a relatively new phenomenon that may have brought many benefits, but they have come at a price and in some markets it is the most vulnerable that are paying.
Grocery retailers, the undisputed masters of convenience shopping, have lured consumers into bulk purchases at low prices to make their profits, but in the payment protection insurance (PPI) market the reverse is often the case.
It is not about selling multiple policies to each consumer, but more about making the highest margin from each sale.
Certainly historically this seems to have been the philosophy of some underwriters and distributors in the market.
However the problem is that consumers do not realise just how much the insurance they take out on the back of a credit agreement is costing them and that it is often available elsewhere for cheaper. Nor do they realise just how easy it can be to arrange.
The Competition Commission has been investigating the PPI market and has released its emerging thinking on the subject.
It says that initial findings show consumers are price sensitive when it comes to the credit they take out, but not the insurance that protects it.
The Competition Commission has also found that there may not be substantive pressure for many distributors selling PPI on the back of credit products, giving them little incentive to offer the very best prices and products to their clients.
It may be convenient to sell to consumers at the point of sale and it may make their lives easier, but in many instances it may not be their best option.
Although there are alternative options, the fact they are not being taken would suggest consumers are often not even aware of their existence. It would also suggest that the status quo does not let others get the message across easily.
A concern must be that in trying to address this issue, the Competition Commission may go as far as trying to completely split the sale of insurance from the sale of the credit itself.
Splitting the sale of credit and PPI may go against the modern shopping ethos. Furthermore, it may create large-scale upheaval in the market and it will definitely put many noses out of joint.
Aidan Plumridge is head of marketing and business development at Cassidy Davis
The views expressed in this article of those of its author and do not necessarily represent those of IFAonline or any other Incisive Media affiliated organisation.IFAonline
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