If you have taken out a credit card in the last ten years then it is likely your bank or credit card company offered you some kind of payment protection insurance. The cover is supposed to protect the cardholder in the event they are unable to work due to sickness, accident or redundancy. Many people feel a sense of security having the cover in place, but most do not realise that only 11% of people who try to use their card PPI policies have their claims accepted! This means that almost 90% of people who have a card ppi policy, whether it is with Ulster Bank or any other lender, are paying for something they may never be able to use.
Credit card payment protection insurance can be very expensive. It is usually charged on a monthly basis depending on your outstanding balance. Cover generally costs between £0.79 and £1.50 per £100. This means if you owe £5,000 you could be charged between £39.50 and £75.00 per month - that is equivalent to between £474.00 and £900.00 per year. Many people don’t even realise they have PPI on their credit card account as it has sometimes, in the past, been sold using an ‘opt-out’ system. This means if you did not tick a box on your application the cover may have been added automatically. Check a recent statement carefully to see whether you have any additional charges. Some lenders also use other names such as ‘card protect’ or ‘card guard’ this is, essentially, Payment protection just with a different name.
One of the major reasons so few people are able to use their payment protection policies is because the cover has been so frequently mis-sold. PPI is not suitable for everyone and has many exclusions and exemptions. In many cases cover has been sold to people who could never hope to use the policy. For example, many policies do not cover people over the age of 65 yet many people above this age were sold the insurance. Another example is customers who were retired, unemployed or in full-time education when they were sold payment protection. It is obvious that these people should never have been sold a policy as they have no need for loss of employment cover!
Which? the consumer action campaigned for Ulster Bank to remove PPI from sale alongside its student credit cards. The cover offered to pay up to 10% of any outstanding balance, but was only available to customers who worked at least 16 hours which would exclude the majority of students. The insurance was subsequently withdrawn from sale beside student cards and Ulster Bank claimed its inclusion had been an error.
In addition to being sold to customers who were unsuitable Payment protection has also been mis-sold in a number of other ways. Crucially many customers were given the wrong information at the point of sale or were mis-led into believing the cover was compulsory.
It is not known how many PPI policies have been mis-sold, but The Financial Ombudsman Service reports receiving up to 5,000 new complaints per week in the three months leading up to the end of 2010. This figure gives a small indication of just how widespread the PPI problem may be. In line with several of the largest lenders RBS, whose subsidiaries include Ulster Bank, has allocated funds to deal with future complaints regarding payments protection. The lender announced in May 2011 that it would be allocating £850 million and revealed it had already paid out around £200 million in compensation.
If the full costs or the terms or conditions of your payment protection policy were not explained, if you were put under undue pressure to take out the cover or if, for any other reason, you believe your policy was mis-sold you have the right to make a claim. So far, more than 1.5 million unhappy customers have applied for PPI refunds and millions of pounds have been paid out in compensation.
You can also file a complaint if you have been charged fees on your credit card that you believe were unfair. If you have paid an over the limit fee or a late payment charge that you believe was unjust you can make a claim to get your money back. To find out more call our claims team today.