Payment Protection Insurance also known as PPI or Loan Protection Insurance has been criticized by among others the Financial Ombudsman Service, Financial Services Authority, Office of Fair Trading (OFT), Consumer Groups and the Citizens Advice Bureau (CAB) who described PPI as a “protection racket”.
Often expensive- The CAB’s complaint to the OFT showed that in many cases PPI is more about providing an additional source of profit for the financial industry than about protecting consumers.
Could be obtained elsewhere cheaper- An increasing number of companies are beginning to sell standalone PPI policies, which can be used to protect any loans you’ve taken out much more cheaply than lenders’ own insurance.
A number of circumstances surrounding the sale of the policy can determine if you have been mis-sold it, amongst them:-
- If you were Self-Employed or Out of Work at the time the policy was sold to you – then you probably can’t claim, making the policy worthless
- Not asked at the time of sale if you had PPI in place – you may well be already covered
- Not notified of the exclusions on the policy – these can prevent you from making a claim
- Considerable pressure being applied to you to take out the PPI
- Paying a lump sum for the PPI without receiving advice that it is possible to make the payments on a monthly basis
- Paying a lump sum up front for the PPI, but then paying the loan off early without getting a refund of that insurance premium
We won’t go into detail of the reasons why lending was Irresponsible as we don’t wish to assist the lenders in defending claims, but anyone that has been through an IVA or Trust Deed will have their own opinion.
We have been submitting these types of claim for over a year. Briefly if a lender was due commission (we haven’t come across any cases whereby they didn’t) for selling PPI and they didn’t disclose it to you (we have never seen a case whereby they did) you weren’t able to make a reasonable decision as to the merits of what you were offered:
- If you knew that the lender would get up to 80% of the premium back, it would be clear that the policy was expensive.
- It prevented you from realising that “shopping around” could save you a lot of money.
The Court’s have recently ruled that hiding excessive commission made the relationship between you and the lender “unfair” (under the 1974 Consumer Credit Act)