In the 1990s a new phenomenon hit the high street with the widespread induction of retail store cards. Within just a few short years it seemed that the cards were being offered by every major retailer from Debenhams to the IKEA Homecard.
The store cards offered the customer the option to pay for goods purchased in their specific store using a card and repay the purchase cost either in full monthly or in smaller amounts over the course of several months. Like most credit cards these store cards, for example the IKEA Homecard often had a credit limit of several hundred pounds.
Critics of the store cards claimed they encouraged customers to spend money they didn’t have. The fact that so many stores offered the cards also meant that some people had cards for many different retails and could easily accumulate a large amount of debt very quickly.
Store cards, E.g. The Ikea Homecard, have also been criticised because they were sold by retail assistants who were not always sufficiently trained. This meant customers often didn’t realise that spending on the cards could attract interest in the same way as a credit card.
The other issue concerning store cards is that many were sold including the controversial Payment Protection Insurance. Payment Protection, often known simply as PPI, is an insurance cover that protects a borrower if they are unable to work as a result of accident, sickness or involuntary redundancy. The cover in itself is not bad and can, for many people, provide a welcome financial security net, but it is not suitable for everyone and has been frequently mis-sold.
Store card Payment protection insurance is usually calculated in the same way as credit card PPI. This means that it is individually calculated each month according to the policyholder’s outstanding store card balance. The charges for this type of PPI may vary between 79p-£1.50 per £100 outstanding on a balance. If you have an outstanding balance of £500 on your store card, therefore, you may pay between £3.95-£7.50 per month for the cover or between £47.40-£90.00 per year. This figure will, of course, vary if you owe more or less on your card.
Some may feel that paying £90.00 a year for financial protection is very reasonable, but many people do not realise that payment protection usually only covers the very minimum repayments and has a high number of exemptions. Exemptions are things that the insurance policy will not cover. Commonly with PPI cover this can include some medical conditions such as back pain, depression and stress. This means if you were forced to take time off work due to one of these conditions it is unlikely your policy would cover you.
Many people also discover when they try and use their store card Payment Protection cover that it has been mis-sold to them and they are actually ineligible to use the policy. With many policies this can include people under 18 or over 65 and people with pre-existing medical conditions.
In addition to customers who are ineligible to use their payment protection cover there are also policyholders who have been sold a policy that can actually be of little or no use to them. This can include people in full time education and those who are retired. PPI covers you for the loss of employment so why would you need the cover if you are not employed?
Because of a lack of training and internal processes many store cards were mis-sold. In many cases sales staff simply didn’t have the product knowledge to know whether or not a customer would be suitable for payment protection cover and offered it on a blanket basis to everyone.
If you think you may have been mis-sold a PPI policy on a store card, call our team today on 0207 471 2000 to start your PPI claims. You can also request a claims pack by completing our quick claim form. Remember, there are many ways in which your policy may have been mis-sold. If you feel you were not made fully aware of the terms and conditions, if you were incorrectly told you had to have the cover or if the cover was added without your consent these can all be considered forms of mis-selling.