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LifeSearch has launched a stinging attack on payment protection insurance providers, branding them poor quality.

The insurance brokerage giant has thrown its weight behind the Competition Commission's findings on PPI and echoed its calls for steps to open the market up.

LifeSearch's response to the Commission's interim report stated: "The success of all these products will, to some extent, be determined by the ability of the manufacturers to distribute these products within an open and competitive distribution market.

"The stranglehold enjoyed by a small handful of high street lenders ensures that providers of credit enjoy a captive market.

"This market is spoon fed a diet of poor quality PPI products which have rapidly come to dominate the market.

"The subsequent dominance of PPI means that the positive consumer outcome presented by product innovations could be threatened."

This conclusion mirrors that of the 218-page interim document from 5 June, which accused PPI providers of overcharging consumers by £1.4bn a year because of a shortfall in effective competition.

According to the Commission's report: "Distributors and intermediaries fail actively to seek to 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.

"We conclude 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 well-functioning market."

Peter Davis, inquiry chairman and deputy chairman of the Competition Commission, said: "We have found serious problems with the PPI market and customers are paying for the lack of competition.

"Distributors do not appear to compete much with each other on either price or quality of PPI; neither do they appear to do much direct advertising of PPI to win customers from each other.

"In taking action to improve competition between companies selling PPI we shall be enhancing the incentives for companies not only to compete on price but to compete on non-price factors such as quality and service."

The LifeSearch response to these conclusions will form part of a consultation the Competition Commission is carrying out on the issue, which will result in regulatory changes to be introduced at an unconfirmed future date.