Banks will no longer be able to sell payment protection insurance at the same time as credit cards, loans and mortgages, the Competition Commission said on Thursday.

Providers will now have to wait seven days before they can contact customers to sell them the insurance. The move upholds an earlier ruling made by the commission on plans for a point-of-sale prohibition, which was held up by a challenge by Barclays bank.

PPI is supposed to cover borrowers’ loan repayments if they fall ill, die, or lose their jobs. It is sold to cover a variety of financial products, but more than 90 per cent of PPI sold in the UK relates to unsecured personal loans, credit cards, mortgages or secured loans.

The Competition Commission is also introducing a package of measures to boost competition in the market, including personal PPI quotes for consumers, annual statements on the cover and better information to make it easier for people to shop around and switch provider.

It is also banning the sale of single premium PPI policies, in which the cost for the entire term of the policy is paid upfront and usually added to the debt being taken out.

Barclays had argued that the point-of-sale ban was not justified by the evidence collected by the commission and failed to consider the inconvenience that could arise for consumers.

But the commission said that having reviewed the evidence it had come to the clear view that customers would benefit “significantly” from the reforms it was proposing.It said the changes would mean PPI providers would face real competition, where there is currently little, and as a result the cost of the cover would fall significantly.

PPI has been heavily criticised in recent years after research found it had been mis-sold to many consumers who would never be able to claim on it, while others felt pressurised into taking it out alongside a loan or credit card.

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