It is feared that millions of people may have been mis-sold insurance policies they did not want or need in a scandal stretching back more than 10 years. Have you been affected and could you be owed thousands of pounds in compensation?
In 1998 Which? Magazine first shone a light on Payment Protection Insurance. The magazine drew attention to the poor value offered by policies highlighting their high cost and the large number of exemptions involved.
Payment Protection Insurance, or PPI, is designed to cover a policyholder if they are unable to work following an accident, illness or redundancy. The cover will, in theory, step in and cover debt repayments on bank loans, mortgages or credit cards to prevent financial hardship, but the high number of exemptions mean that as little as 15% of all those who try and use their policy are successful.
Payment Protection Insurance policies are extremely common and bring in more than £5 billion a year for banks and other lenders. For years the cover was sold with very little regulation and, with large rates of commission on offer, this led to the development of a culture of high pressure selling. In the years following the Which? exposé pressure continued to mount from consumer action groups for a serious investigation into the PPI market. In 2005 The Citizens Advice Bureau (CAB) joined the calls for change launching a super complaint. They claimed PPI was being frequently sold with bank loans and other financial products by staff who were poorly trained and who were encouraged to use high-pressure selling techniques. They also joined Which? in highlighting the cost of the policies and the poor value they provided.
The CAB complaint prompted investigations by The Financial Services Authority (FSA) and The Office of Fair Trading who produced reports which pointed to widespread failings throughout the market. As a consequence, many lenders were fined and all were issued with a warning that they must bring about change and soon.
Unfortunately, despite the 2006 investigation, a 2009 follow up found some lenders were still failing to put in place sufficient processes to prevent customers being mis-sold PPI with bank loans and other forms of credit. In response, The FSA unveiled new regulations to help protection consumers. Lenders were unhappy with the new regulations, though, and The British Banking Association (BBA) requested a high court review. In April 2011 the courts announced their decision and found in favour of The FSA and consumers. In May 2011, The BBA finally admitted defeat and decided not to appeal the decision.
It is hoped that this latest chapter in the story of PPI will mean an end to mis-selling, but it is still feared that millions of people have been sold this cover in the past. Below is a list of the common ways in which PPI has been mis-sold with bank loans, mortgages and credit cards.
- The customer was told they had to have the cover.
- The customer was told taking out the cover would improve their chances of being given the loan.
- The customer was sold the policy even though their circumstances made them unsuitable. E.g they were unemployed, retired or a full time student and therefore could not have made use of many aspects of the policy.
- The full cost of the policy was not explained to the customer.
- The full terms and conditions of the policy were not explained to the customer.
- The customer was sold a single premium policy without being told it would not cover the whole length of their loan.
- The customer was pressured into taking the policy by a salesperson.
If you believe you have been mis-sold PPI on bank loans, you have the right to make a complaint. To start reclaiming your money complete the quick claim form above or call our customer care team on 0207 471 2000. We have a great deal of experience negotiating the settlement of PPI claims and so far we have reclaimed more than £50 million for our customers. Just click to start your claim today.
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