PPI stands for Payment Protection Insurance, a product which is
intended to cover the repayments on a consumer's loans, mortgages,
credit cards and any other debts. It acts as a backup just in case
you lose your source of income for some reason or other. It works
by paying a monthly premium which will protect your repayments, but
while it may seem like a good idea, in reality PPI is more
often than not mis-sold by dishonest sales people who are only
interested in gaining more commission.
You may have heard in recent news about the major high street
banks losing a big court case that focused around restricting the
circumstances in which consumers who had been mis-sold PPI policies
would be allowed to claim back compensation. The banks lost and now
millions of people who were mis-sold a PPI policy will have the
opportunity to claim back refunds worth thousands of pounds.
If you have or had a PPI policy then you may be able to claim
compensation. It is important to remember that just because you
have a PPI policy does not necessarily mean that you are entitled
to a refund. The problem that may arise is not about the
insurance itself, but with the method in which it was sold to
you.
How do I know if I was mis-sold PPI?
The selling of PPI policies is regulated by the Financial
Services Authority (FSA), who has been responsible for this area of
the insurance industry since 2005. The FSA has created many rules
and regulations that explain how PPI and other insurance products
should be marketed and the responsibilities that the companies that
sell PPI need to follow. Before 2005 the selling of PPI was not
regulated at all - banks and building societies were subject
to various codes of practice that covered all of their business
dealings, including the selling of PPI.
In order to make a mis-selling claim it is necessary to
demonstrate that the company which sold the PPI breached one or
more of the FSA's regulations. If you have been sold a PPI policy
then you can perform a simple audit that will allow you to decide
whether you have a claim for PPI mis-selling:
1. Were you
aware that you had a PPI policy?
Payment Protection Insurance will often be included with a loan,
mortgage or other credit product as standard and the consumer had
to specifically ask for the PPI policy to be removed from the sale
if they did not require it. Often the paperwork was confusing and
it was not apparent that PPI was included. In these cases, the PPI
will have been mis-sold.
2. Was your
credit product conditional on the purchase of PPI?
Sales people would sometimes tell consumers that the credit
provider was concerned about their ability to cover their
repayments if they lost their source of income and that they would
not be approved for credit unless they also agreed to take out a
PPI policy. In these circumstances, the PPI has been deliberately
mis-sold.
3. Were you
advised to "shop around"?
FSA regulations require PPI companies to advise consumers that
they may be able to get a better deal elsewhere. Failing to do this
is a ground for a mis-selling claim.
4. Was your PPI
suitable for your needs?
Most PPI policies have very strict terms which mean that the
policy will not cover anyone who is not aged between 18 and 65, who
has suffered from any health condition including stress, back ache
or mental illness, or is not employed full time on a permanent
contract. FSA rules require that PPI companies will need to advise
the consumer about the limitations of the policy and to ensure that
the policy is suitable for the consumer's needs. If you have
purchased a PPI policy but have fallen foul of its conditions then
you probably have a mis-selling claim.
This list is not the only justification for mis-selling, there
are a wide variety of other grounds that could allow a mis-sold PPI
claim to proceed. The key point to remember is that if the PPI
company did not deal with you in an open and honest way, or failed
to act in your best interests, then you will more likely than not
be able to claim.
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