On 7 February 2008, The Office of Fair Trading (OFT) referred the supply of Payment Protection Insurance (PPI) to non-business customers in the UK to the Competition Commission for investigation under Section 131 of the 2002 Enterprise Act. This report sets out the Commission’s provisional findings.PPI covers repayments on the insured credit product if the borrower suffers an insured event - usually accident, sickness, unemployment, or death. PPI is sold to cover a variety of credit products but over 90 per cent of the PPI sold in the UK in 2006 was either personal loan PPI (PLPPI), credit card PPI, mortgage PPI, or second-charge mortgage (also known as secured loan PPI (SMPPI)).Other forms of PPI include motor insurance and retail finance. Most PPI policies are sold by distributors at the point of sale of the credit being insured. The PPI policies sold are underwritten by insurers.In 2006 customers in the UK paid GBP 4.4 billion in premiums to be covered by PPI policies and such policies are usually sold either face-to-face, over the telephone, or via the internet. PPI policies are paid either through a regular monthly premium or a single premium, which is added to the loan amount when the loan is agreed.The Competition Commission concludes that there are features of relevant markets that, alone or in combination, prevent, restrict, or distort competition in the supply of PPI to non-business customers in the UK.These features include: Distributors and intermediaries who fail to actively win customers by using the price or quality of their PPI policies as a competitive variable; Consumers who want to compare PPI policies (including PPI combined with credit), stand-alone PPI, or short-term income protection insurance policies are hindered in doing so; Consumers who want to switch PPI policies to alternative providers or to alternative types of insurance policies are hindered in doing so. Terms that make switching expensive - in the case of single premium policies - act as barriers to switching for PLPPI and SMPPI policies; And, the sale of PPI at the point of sale by credit providers further restricts the extent to which other providers can compete effectively.The Commission found that the detrimental effects on consumers of these features are higher prices and lower demand for PPI, less choice, and possibly a lesser degree of innovation in PPI policies than would be expected in a well-functioning market. The lack of competition makes PPI highly profitable, with the Commission estimating that the 12 largest distributors of PPI make profits in excess of the cost of capital of GBP 1.4 billion in 2006.The Commission’s final report on the subject will examine if there are significant counterveiling relevant customer benefits that outweigh the adverse effects on competition.