subject: Ppi Claims- A Balancing Act Between Lending And Repayment [print this page] In the wake of financial meltdown across Europe; banks, lenders and other financial organizations have suffered a lot of credit defaults. Financial uncertainty created hindrance in the ongoing circle of liquidity and most of the people got trapped in cash crunch. Because of the lay offs it became very difficult for a common person to continue with the requirements of day to day life, and in this situation people start taking loan after loan to maintain their lifestyle to the earlier standards. But neither these borrowers nor financial institutions and banks paid any heed to the most important issue and that is how these loans will be repaid as most of them were of unsecured nature. This made the matter worse and money lenders suffered huge losses as credit defaults skyrocketed. However, there had to be something which can provide some sort of shield to the lenders money and safeguard their position. This is exactly they have found in one financial product called payment protection insurance (PPI) policy, this is also termed as PPI claims.
PPI compensation claims provide lenders the opportunity to be on the safer side while lending the money. This policy is designed to keep the circle repayment rolling as it compensates the lender if, in case, borrower is unable to keep his/her commitment of paying back the loan amount with in the predetermined time frame. Sometimes, there are genuine reasons of credit defaults by the borrower. For example; a serious accident which forced borrower to remain unproductive for a period of time or due to adverse financial conditions overall, he/she got jobless etc. These situations are unforeseen and it is very difficult for every one to be prepared with the back up plan every single time something of this nature takes place. However, PPI policy provides one time solution to all these problems.
Though, this is good for both lender and borrower, but it can go wrong if it is imposed on the borrower without taking him/her in to confidence. If the borrower is not told about the PPI policy before clubbing its payments with the loan installments and also, if the lender did not mention to the borrower that this policy is optional then this is a clear case of mis-sold PPI. In this scenario, borrower can always follow the demand for PPI compensation claims. It is borrowers right to claim back the money spent on PPI policy after successfully writing off all the dues.
