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Alliance and Leicester PPI

If you have bought an Alliance and Leicester PPI policy in the past you may be aware the company was reprimanded in 2008 for mis-selling the cover. The lender was given a fine totalling £7 million the highest ever handed out in relation to PPI mis-sale.

Payment Protection Insurance has been sold by Alliance and Leicester and many other banks, building societies and brokers for more than a decade. The insurance is supposed to cover a borrower if they cannot keep up debt repayments as a result of sickness, involuntary unemployment or accident. The cover can provide a valuable financial fallback for borrowers, but is not suitable for everyone. Some people may not need the insurance or may not be suitable for cover.

The Financial Service Authority’s investigation looked at the sale of Alliance and Leicester PPI policies between January 2005 and December 2007. They discovered that some policies had been sold using high pressure sales techniques and that some customers had been recommended cover that was not appropriate for their circumstances. In other cases customers not been made fully aware of the costs of the cover.

The cost of Alliance and Leicester PPI and similar types of cover sold by other lenders can vary considerably. Loan PPI is usually charged as a lump sum and can cost in the region of 13-25% of the core loan value (although, in some cases, lenders have been found to have charged up to 56%). The cost of the PPI is incorporated into the customer’s loan borrowing meaning it can significantly increase the customer’s overall debt. This can result in the customer taking much longer to pay off their loan. The PPI borrowing will also incur interest at the same rate as the loan.

Alliance and Leicester PPI on credit cards is typically charged on a monthly basis depending on the customer’s outstanding balance. Most credit card PPI is charged at a rate of between 79p-£1.50 per £100 outstanding. On a credit card balance of 4,000 a cardholder could, therefore, pay between £31.60-£60.00 per month.

If you are unsure whether your Alliance and Leicester PPI policy was mis-sold you should begin by thinking about the information you were given at the time of sale. If the salesperson failed to explain the terms and conditions or costs of the policy to you in full you may have been mis sold PPI. Your policy may also have been mis-sold if you felt under undue pressure to take out the cover or the policy was added without your consent or knowledge.

You may also be able to make payment protection claims if you were given the wrong information, for example that the cover was compulsory or would improve your chances of being given the loan. PPI has always been optional and would not affect your credit status.

As stated earlier, PPI is not suitable for everyone – if you were over 65, had a pre-existing medical condition or were self-employed you may have been sold cover you could never use.

To find out more about making a claim for mis-sold payment protection insurance call our team on 0207 471 2000.

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