The restrictions will affect some home catalogue retailers
The sale of payment protection insurance (PPI) alongside goods sold in home catalogues should be restricted, says the Competition Commission.
It follows a similar recent proposal for the wider sale of PPI policies.
The insurance is supposed to ensure people can repay loans under credit agreements if they fall ill or lose their jobs.
The main restriction would stop a catalogue firm trying to sell PPI within 14 days of granting credit.
"Retail PPI is highly profitable for distributors and there is little competition between providers on price and other factors, limited ability for customers to search for alternatives or switch products and a considerable point-of-sale advantage for the providers," said the commission.
The amount of money spent last year on "retail PPI" was just £73 million, compared with the £4.5 billion spent on all other types of PPI the year before.
As with its main recommendations on PPI, the commission wants to change the rules so that people who take out credit agreements when buying goods from home catalogues have a proper choice of insurance, if they think they actually need it.
Among the suggested restrictions on current retail PPI sales methods are:
• selling PPI separately from insurance for the goods
• a requirement to give a "personal PPI quote", stating the separate cost of the policy being offered
• to provide standard information in adverts, such as the monthly cost and the fact that the insurance it is optional
The commission said the effect of its main recommendation - the 14-day ban on offering a PPI policy - would be to end a retailer's inbuilt "point-of-sale" advantage, and let customers shop around for alternative polices if they wanted them.
The commission started its investigation into the much-criticised selling of PPI last year, after an earlier investigation by the Office of Fair Trading.
"As we found that distributors have high margins, and enjoy high profitability, when selling retail PPI, we concluded that consumers were paying prices higher than they would in a well-functioning market, in line with the provisional findings for other forms of PPI," said the commission's report.