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Barclays bank challenges PPI ban

It has been revealed that Barclays bank, along with Lloyds bank, is set to challenge the UK government's controversial decision to ban the sale of payment protection insurance when credit arrangements are agreed. The ban, which will come into force in October 2010, will see a cooling off period of seven days before any credit provider can approach a customer regarding the sale of payment protection insurance.

At the moment credit providers are able to sell payment protection insurance at the point at which a credit agreement is signed, which many believe has reduced competition in the marketplace. However, Barclays bank is challenging two particular elements of the competition commission's report i.e. the size of the market and the evidence provided regarding competition issues. In a bizarre turnabout, Barclays bank will be supported by 43% UK government owned Lloyds bank which is something of an embarrassment for the UK government.

Payment protection insurance has long been the bane of the consumer protection sector with particular accusations regarding the price of those packages offered at source, as well as the necessity for customers to sign up to them. It will be interesting to see how the Barclays bank court case develops because this is a significant stumbling block for the banking sector and a potential crossroads for the UK government. Who will win the day?

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