You may have heard in the news recently about a decision in a
court case between the major high street banks and the Financial
Services Authority (FSA). This decision means that it is now
possible for thousands of people who have purchased a PPI policy in
the past to begin claim back their mis-sold PPI. But the
majority of these people will be unsure about what counts for the
grounds on which a mis-selling claim can be made.
The FSA regulates the financial services industry by setting the
rules and regulations which various types of financial businesses
must follow. This has included the selling of PPI, regardless of
whether or not the PPI seller engages in any other kind of
regulated financial activity.
Under the Financial Services and Markets Act 2000
anyone who has suffered a loss or damage because the FSA's rules
have been breached by a business, has the chance to take legal
action against that business and make a compensation claim. The FSA
rules on the selling of PPI are based on what a claim for
mis-selling can be made.
The FSA's rules on PPI are known as ICOBS (Insurance Conduct of
Business Standards) and they can be found in the FSA regulatory
handbook. These rules cover all aspects of running an insurance
business and marketing insurance products, but there are very few
rules that focus just on the sales process. The FSA rules require
all PPI sellers to act in an open and honest way and ensure that
any product which they recommend is suitable for the consumer's
financial circumstances and needs. Below you will find a few common
examples that constitute a breach of FSA rules, and could result in
a successful claim for PPI mis-selling:
- The PPI seller added the Payment Protection Insurance to the
loan or credit product without asking the consumer for their
permission;
- You had a pre-existing illness or medical condition, such as
back ache or stress, and as a result you were not covered by the
terms of the policy;
- The loan or credit agreement contained PPI by default ,and the
consumer was required to specifically ask for this to be removed if
they didn't want it;
- The PPI seller falsely stated that the consumer's application
for a loan or other credit product would not be approved unless
they purchased PPI at the same time;
- The PPI seller did not tell the consumer they should shop
around for the best deal and that they might be able to purchase
the same level of protection much cheaper elsewhere;
- The PPI seller falsely stated that the consumer could only
purchase PPI at the time the loan was set up, and that they would
not be able to protect their repayments at a later date;
- The PPI seller did not ask you about any other insurance
products which you had and so you ended up paying for a PPI policy
which was no use to you because already had cover under your life
assurance or health insurance;
- You had been made aware by your employer that you may be made
redundant at the time you purchased the policy, and the PPI seller
did not explain that you would not be able to make a claim under
the policy when you were made redundant;
- The PPI seller did not kept any records of the information
which they took from you during the sale process, and they have not
properly documented their recommendations about the suitability of
the policy and their warnings about the terms and conditions;
- The PPI seller sold you a policy that was unsuitable for your
needs and circumstances; you did not meet the policy requirements
on employment status, age or medical history and so would be unable
to claim the benefit of the policy if you lost your source of
income;
- The PPI seller failed to ask you about your age, state of
health, medical history and employment status. Meaning that they
did not have sufficient information to make an appropriate
recommendation about the suitability of the policy and so is in
breach of the FSA regulations;
- The PPI seller received commission from the insurance company
in return for arranging the sale, but they failed to mention this
in your loan documents. Even if the PPI seller told you about this
orally, if there is no written record then the commission is
classed as a "secret profit" and the sale becomes invalid.
This list is not all the grounds for which as claim can be made,
there are a large number of situations in which it is possible to
argue that the PPI seller has breached FSA Rules. If you are
concerned that you may have been treated unfairly in the way when
buying a financial product, you should make a claim to find out if
you are entitled to a refund.
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