Recently there has been a lot of news about the ongoing Payment
Protection Insurance (PPI) mis-selling scandal by the major high
street banks and other PPI providers. These providers include
insurance and credit card companies, mortgage firms and credit
brokers. The one major problem with this situation is the vast
amount of people that are still confused about whether or not they
are entitled to make a claim for compensation and many are unsure
about how they should go about getting their money back.
PPI is a financial product that was intended to provide
consumers with an insurance policy that would help them meet their
repayments towards any outstanding debts, if they are suddenly
unable to work due to illness, accidents or being made redundant. A
PPI consumer will pay a monthly premium and once the policy has
been ongoing for a qualifying period (usually between 60-180 days),
the consumer's debt payments will be protected under the PPI policy
if they lose their source of income.
Although this does sound like a good deal, the real problem has
come from the ways in which PPI policies were purposefully mis-sold
to unsuspecting consumers. Most cases have ridiculously over priced
policy premiums and very restrictive conditions that made the PPI
policy completely unsuitable for most consumers. But credit
companies were still marketed these products and using extremely
unfair tactics to persuade consumers into buying a PPI policy along
with their credit card. Several cases involved PPI sellers using
unfair tactics that clearly breached the insurance selling
regulations put in place by the Financial Services Authority (FSA)
and in these circumstances the PPI was mis-sold.
The FSA regulates the insurance industry and has strict rules
about the selling of PPI, these rules are known as the Insurance
Conduct of Business Standards (ICOBS). The Financial Services
and Markets Act 2000 states that a breach of the FSA
regulations is actionable at the suit of private individuals, and
anyone who believes they have been a victim of a PPI mis-selling by
a company that has failed to comply with FSA rules, has the right
to take legal action to gain a full refund. The FSA rules are very
complex, but they also require companies that sell PPI to maintain
an honest insight in all of their dealings with consumers. They
need to ensure that any insurance products they sell are suitable
for the consumer's needs and individual financial
circumstances.
The salesperson will often try to persuade a consumer to take
out a PPI policy and have no concern whatsoever about the
suitability of the product. This situation will usually be down to
the failure of the salesperson to make any kind of enquiry into the
consumer's state of health, level of debt, and their financial and
working situation. In many cases where the salesperson has made an
effort to discover this information, they will rarely put it to use
when recommending the consumer to take out a PPI policy and they
tend to pressure the consumer to purchase a policy even when it is
of no use to them. The salesperson will attempt to sell the most
expensive policy, which pays the largest commission, even though
they are fully aware that the consumer could purchase the same
level of PPI at a much cheaper rate on the open market. These are
several examples of the various dishonest and deceitful behaviour
which can constitute a complete breach of FSA rules and on which it
is possible to make a claim for PPI mis-selling.
If you have taken out a PPI policy and are concerned by the way
it was sold to you and if it was in any way unsuitable for your
circumstances, you may be able to claim for PPI mis-selling and you
should complain to the financial services provider who sold it to
you. The FSA rules state that the financial services provider must
respond to your complaint in writing and if your claim is rejected
or they refuse to answer, you will have the legal right to forward
the matter to the Financial Ombudsman Service which is an
independent organisation with the power to investigate complaints
and force all PPI sellers to pay out compensation if they discover
that a PPI policy has been mis-sold to you.
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