subject: Ppi Claims, You Have The Right To Make One [print this page] PPI or Payment Protection Insurance is a type of cover that provides repayments on personal loans, mortgages and credit cards. It is supposed to be a benefit to consumers should they loose their main source of income. Unfortunately, this cover was largely mis-sold by many high street financial service providers and banks. An estimated 10 billion in compensation is likely to be paid out to consumers fraudulently sold PPI.
What Exactly is PPI?
As mentioned above, PPI stands for "Payment Protection Insurance". The cover provides the insured with funds to repay loans such as personal loans, auto loans, mortgages loans and even credit cards. If the insured becomes disabled, ill or unemployed, the cover kicks-in for a period between 12 and 24 months. After that compensation period, the consumer must again pay any monthly loan installments.
Why are there Complaints about PPI?
In theory, PPI cover sounds like a good investment. It would be of benefit to anyone unable to work. However, many consumers who purchased a policy that make claims are not paid. Few insured actually receive the insurance benefit. Additionally, payments made with a policy on credit cards and store cards only pay the minimum due at the time the insurance claim is filed. This means if a consumer makes additional purchases with the credit or store card, the balance will rise and the PPI will not cover the higher balance.
What Characterizes PPI Mis-Selling?
In short, the bulk of this occured when individuals that have no real chance of making a claim. But there are other instances where payment insurance was mis-sold:
Individuals that were retired, self-employed or unemployed at the time the cover was sold.
Individuals having medical aliments or physical disabilities which prevented them from working at the time the policy was sold.
Individuals that were not told of the total cost.
Loan quotes with the insurance already attached, but not disclosed to the borrower.
Consumers that were informed that the insurance was compulsory in order to obtain the loan or credit card.
Persons that were over ages 65 to 70 or over the age limit for the policy.
If the institution which sold the policy was already involved in a prior action with the Financial Services Authority.
Consumers which bought insurance for long term loans. The cover generally will run-out before the term of the loan has ended.
Consumers already having cover.
Individuals paying for a policy without being told of the "opt-out" provision in the documentation.
How Much Compensation is a Consumer Entitled for being Mis-Sold?
Compensation ranges by individual cases. However, it is entirely possible a consumer will be compensated the full amount of premiums paid, if decided by the Financial Ombudsman Service. Interest might even be added to the compensation.
To Whom Do I Complain?
Consumers should first write a letter of complaint to the financial services firm, mortgage lender or credit card company which sold them the insurance. If the institution claims the cover was made within the sale guidelines, consumers should press for evidence. If the company does not answer the complaint letter, another letter should be sent 14 days later.
Consumers that are not offered compensation or ignored should contact the Financial Ombudsman Service at once. Any delay could cost the consumer on their PPI Claim.
