LONDON - The Competition Commission said on Thursday it expects to complete its inquiry into payment protection insurance ahead of an official February 2009 deadline and aims to publish its first paper on the matter this autumn.

The Office of Fair Trading referred the market for PPI -- insurance covering the repayment of loans when borrowers fall ill, are injured or are unemployed -- to the competition authorities in February, after saying Britons could save 1 billion pounds a year with greater competition.

"Although the statutory deadline for the inquiry is 6 February 2009, the inquiry group aims to complete its investigation more quickly than that and expects to publish its next publication -- the 'emerging thinking' document -- in the autumn," the commission said.

In a statement on Thursday laying out the issues it will examine when it looks at the 5.5 billion pound market, the commission said it would consider both the sale of PPI by distributors to customers and the provision of PPI by insurers through distributors.

It said it would also consider price competition between suppliers and any barriers to entry and expansion.

The commission said it had not yet identified any competition concerns, but its statement served to inform interested parties ahead of a first round of hearings from May to July this year.

There are about 20 million PPI policies in force and 7 million taken out each year. Policies kick in if consumers are unable to repay mortgages, credit card bills or other loans if they lose their job, fall ill or have an accident.

The OFT said PPI can provide worthwhile cover, but concerns included a lack of competition at the point of sale, difficulty in comparing policies, a lack of product information and the inclusion of the insurance without a customer's knowledge.

Analysts have expected further scrutiny of the market, which they said could force UK banks to scale back PPI sales -- one of their more lucrative products.

http://investing.reuters.co.uk