If you have taken out any form of payment protection insurance (PPI) in the last ten years it is possible that your cover may have been mis-sold and you may be entitled to compensation potentially worth thousands of pounds.
For many years most banks, building societies and credit card companies have sold Payment Protection Insurance. The cover has attracted controversy in recent years; however, as unhappy customers accused lenders of selling them the cover. Yorkshire bank is just one of the lenders who offered the cover to customers taking out loans, mortgages or credit cards.
Regardless of the type of borrowing to which it is attached (PPI can also be attached to store cards and hire purchase agreements) payment protection insurance offers, essentially, the same type of cover. It aims to protect the borrower from financial hardship if they cannot work due to sickness, accident or involuntary unemployment by stepping in cover repayments.
The trouble with PPI sold by Yorkshire Bank and other lenders is it can be costly and very often doesn’t offer the level of protection customers need or expect.
Loan and Mortgage Payment Protection Insurance is usually added as a lump sum to the initial borrowing and then paid back gradually, as part of the usual monthly repayments, over several years or the life of the loan. The cost of this type of PPI varies considerably, but is typically around 25% of the core loan amount. On a personal loan of £15,000, therefore, you may expect to pay an additional sum in the region of £3,750 for payment protection cover. It is also important to note that, as the PPI is added to your total borrowing, the insurance is likely to attract interest at the same rate as the loan. Unfortunately, because of the way the cover was sometimes sold by Yorkshire Bank and other lenders, customers did not always realise how expensive the PPI cover was or how much of their loan instalment repayments it accounted for.
With regard to Credit Card PPI the cost is usually calculated on a monthly basis and is dependent on your outstanding balance. It often costs approximately 79p for every £100 outstanding. This means if you had a balance of £7,000 on your credit card £55.30 per month for payment protection cover. The cost would, of course, fluctuate depending on your balance, but if it stayed at approximately £7,000 for a year this would mean PPI costs of around £660.00.
In addition to the high costs sometimes associated with Payment Protection Insurance sold by Yorkshire Bank and other lenders, the most policies also have a high number of exemptions and exclusions. These policy conditions mean that many people are unsuitable for the insurance and that many common circumstances are not covered.
Most PPI policies do not offer cover to people over the age of 65, as they are often seen as a higher risk, they also rarely offer cover to people who are self-employed or only work part-time.
With regard to the circumstances not covered by PPI, most policies have exclusions meaning they will not cover common ailments such as back pain, stress or depression. There is also rarely a provision for pre-existing medical conditions.
The mis-selling of payment protection insurance has been associated with both the policies high costs, exemptions and exclusions, but it has also revealed itself to be a much wider issue.
The cause of the mis-selling scandal is difficult to pinpoint. Some blame a lack of staff training while others contend lenders are too blame for incentivising sales staff with high rates of commission and setting unrealistic sales targets. Whatever the reason for the mis-selling problem, it was undeniably an issue throughout the financial world. No major lender, including Yorkshire Bank, has escaped accusations of mis-selling and the number of people making a payment protection claim is at an all time high.
If you are unsure whether your PPI cover was mis-sold it is wise to think about the circumstances surrounding the sale. If you were told something that you have later discovered was incorrect (E.g. the cover was compulsory) or you were mislead in some way (E.g. by being told taking the cover would improve your chance of getting the loan) you could make a claim. Likewise if you were unsuitable for the cover because of your age, employment status (E.g. you were unemployed or in full time education) or because you had a pre-existing medical condition you could be eligible for compensation.
To begin your PPI claim call our team on 0207 471 2000.