subject: PPI: Stand Up for Your Rights [print this page] PPI: Stand Up for Your Rights PPI: Stand Up for Your Rights
The global recession is ongoing and shows little sign of abating just yet, although the economy does seem to be moving in a positive direction, finally. However, this is of little comfort to those who are struggling with debts. There are some debts, though, incurred because of bad practice on the part of lenders. Fortunately, because these debts are the result of illegal practices, it is possible to obtain financial redress, in the form of compensation for losses incurred as a direct result of poor practice.
PPI mis selling tops the tables as the commonest type of debt incurred by consumers because of bad practice on the part of lenders most of whom are the high street banks. Indeed, the banks owe billions of pounds to their customers because they mis sold PPI.
So, how did the banks and other types of lender manage to make so much money using underhand tactics?
Firstly, we need to understand what PPI actually is. PPI stands for Payment Protection Insurance. It is a type of insurance taken out against the risk of defaulting on payment schedules attached to loans and over drafts through various causes, such as unemployment and illness.
Secondly, we need to understand what constitutes PPI mis selling. Lenders mis sold PPI using several strategies, including (but not limited to) the following:
Lenders falsely claimed that PPI was a legal requirement attached to the borrowing of money in terms of loans/overdrafts.
Some lenders, rather than claiming that PPI was legal, created the impression that it was more important than was necessarily the case. Those who took this route acted illegally because their claims should have been justified by a demands and need statement'.
Lenders did not always inform their customers that they had taken a PPI policy against the loan.
Lenders failed to inform customers of the exclusions that would invalidate any claim.
All of the above, and more, constitute the mis selling of PPI and anyone sold a policy in this manner has the right to financial compensation. If any of the above statements apply, a compensation claim is possible.
Thirdly, what was the reasoning behind PPI mis selling? Simply put, it provided a fantastic source of revenue for lenders. Having a PPI policy attached to borrowing, meant that lenders added up to 25% on the value of money borrowed, including interest on the PPI and a premium for set up costs.
A compensation claim for PPI is very likely to hold up in court. For instance, in the five years between 2004 and 2009, the courts upheld over a million claims. Furthermore, current estimations indicate that 95% of claims are successful, and this is only fair. The banks continue to make large amounts of profit, while the public, in general, suffer, PPI claims are a way of biting back.
The Financial Services Authority (FSA) is in the process of clamping down on the way in which lenders sell PPI. This has several benefits for the consumer; firstly, it means protection from future mis selling, and secondly, because the FSA stipulates several clauses within their new rules, consumers are able to make claims relating to PPI policies dating back more than a decade.
