In 2009 Picture Financial Services PLC was declared in default by The Financial Services Compensation Scheme (FSCS). The decision meant, in essence, that the company was not financially able to settle any claims made against it. As a result, any customer’s claims against Picture will now be handled by the FSCS.
Picture Financial Services specialised in selling Payment Protection Insurance on mortgages. Payment Protection covers a borrower if they cannot work due to sickness, accident or redundancy. It works by stepping in to cover repayments until the customer has returned to work and is able to resume debt repayment. Unfortunately, many issues have been identified with the cover leading to a sharp rise in Payment Protection Insurance Claims.
One of the significant issues with mortgage PPI is the cost. The policies can be very expensive adding up to 25% to the original amount borrowed. It also attracts interest at the same rate as other lending meaning it can lead to a significant increase in total debt.
Another issue with mortgage PPI is that it doesn’t always offer the cover people expect. Many lenders, including Picture, sold single-premium payment protection policies. These policies are controversial and have recently been banned. The main problem is that they often do not cover the borrower for the whole life of their loan. Single-premium policies typically last for five years. This means if your loan is for a longer term then you would not have cover in place for the remaining period. The other issue is that many people were sold the cover, but were not told that it would not cover them for the life of the loan. So, for example, a customer with a 25 year mortgage may have bought a single-premium policy with Picture only to discover when they tried to make a claim after 7 years that the policy had expired.
Mortgage Payment Protection Insurance also has a very low payout rate. An investigation by the Competition Commission in 2008 found that only 28% of customers who tried to use their Mortgage PPI policy were successful in doing so. This means that 72% of customers had their claim denied and were left without cover.
In part, the high number of rejections for mortgage payment protection claims has been as a result of mis-selling. It is not known how many customers were mis sold PPI by Picture, but the figure is likely to be significant. Mis-selling often occurs as a result of poor staff training and a failure by lenders to put processes in place to protect customers from being mis-sold an unsuitable product. A more specific list of the types of mis-selling is below.
The policyholder was given incorrect, incomplete or misleading information
Whether to push through sales or just as a result of human error many people were given the wrong information when they took out their payment protection policy. Where you were incorrectly told you had to have the cover or were led to believe it would improve your chances of being given the loan this can still be deemed mis-selling. In other cases customers were sold policies without being made fully aware of the costs or terms and conditions or without being given the policy documents.
The policyholder was sold a policy unsuitable for their needs
There are a number of different circumstances that may make a customer unsuitable for cover. Some examples include a customer’s age, if they are under 18 or over 65, or if they have a pre-existing medical condition. Other examples may include someone who had existing cover in place elsewhere or who was entitled to sick pay from their employer and, therefore, would have only limited use for the cover. Many policies were also sold to people who were retired, in full time education or unemployed – as payment protection is designed to cover for loss of employment it clearly is not suitable for anyone who is not in employment.
If you were mis-sold a mortgage payment protection policy by Picture or another lender you can start your claim by calling 0207 471 2000. We have already helped in excess of 60,000 customers and reclaimed over £50 million. We are experienced at dealing with claims made from the FSCS and other regulatory bodies.