subject: A Guide To Reclaiming Mis-sold Ppi [print this page] Anyone who has taken out a loan, a credit card or a store buying card at any time over the past six years may be in line for a refund amounting to thousands of pounds. The reason for this is because of the huge amount of Payment Protection Insurance (PPI) policies that have been sold as part and parcel of these products. Almost everyone purchasing this type of financial service has been mis-sold PPI.
A payment protection policy is a useful product to have. It can safeguard loan repayments, for a year at least, in the event of the owner becoming ill, having an accident or becoming unemployed. Problems are experienced with the methods used by the finance companies to sell the products. These companies issue their employees with instructions to sell the policies or face financial penalties.
The consumer may be informed that taking out a policy is compulsory in order to secure a loan or other service. This isn't true, which is mis-selling on its own. There is a reasonably good chance that anyone who is unemployed, self employed or even retired may already have the necessary cover in an existing policy and will not need another one. There is the possibility a person has been sold a policy without realizing it although, due to heavy regulation in recent years, this would appear unlikely. Many older loans however, may have been sold under these circumstances.
Sometimes clients call their banks requesting a quote on the monthly repayments required for a specific loan. They will be quoted a figure by the banks consultant who will inform them at the same time that their loan will be fully protected which is jargon for an expensive policy. Many clients won't be able to calculate the repayment amounts in their head but if the figure sounds reasonable, it will be accepted and another mis-sold PPI policy will be in force.
Loans themselves are not the real profit generators. A huge profit is made from the combined loan and cover policy. After a 15 month investigation, in June 2008, the Competition Commission revealed how much money was being made from policies by examining what the public was paying in for their cover, against what was being paid out. The cost of insurance is normally a lot higher than interest charges, but insurance companies do not reap these benefits, the companies who sell the products do.
There is a fair chance that persons who were mis-sold PPI were not fully informed of their policy details. Lending institutions often use subterfuge to mislead their clients, for instance telling them that their policies are compulsory, or just not telling them about the policy, or not asking if the customer already has a suitable policy. Any lending company is duty bound to inform their customers of all details of any policy and to make sure that their product is what the customer really needs.
Clients suspecting that they have been sold a product unnecessarily, have every right to demand a refund of their premiums. Usually the first letter is answered with a rejection couched in legal terms. This is where many people give up. Subsequent letters and reference made to contacting the Financial Ombudsman Service, sometimes results in a settlement.
The Ombudsman has adjudicated many claims in favor of the consumer. If the client has a successful claim there is a good chance his policy will be cancelled so clients should take note of this. It is to be hoped that this article has been of assistance to anyone who has been mis-sold PPI.
