Payment Protection Insurance, or PPI for short, is a type of
insurance that allows consumers to cover their repayments towards
an outstanding debt, such as a mortgage, loan, credit card, or
finance agreement. A PPI policy can cover as many different debts
as the consumer wants.
Consumers need to pay an insurance premium every month and if by
chance they lose their source of income as a result of becoming
ill, having an accident or being made redundant, the PPI policy
will allow them to keep up with their debt repayments, and stop
them from damaging their credit history.
However, many PPI providers sold consumers unfair PPI policies.
In many cases the premium which consumers were required to pay was
extortionate in proportion to the amount of debt repayments which
the policy protected. There was very strict rules about the policy
holder's health and employment status which meant that many people
would not be covered by the policy if they tried to make a claim
under it.
Since 2000 these unfair PPI products were aggressively marketed
to consumers by mortgage, loan and credit providers who were over
eager to boost their profits by persuading new clients to sign up
for an expensive PPI policy at the same time as a credit
product.
The salespeople would regularly use dishonest tactics in an
attempt to close the sale, this often included adding the PPI
policy to the sale even without the consumer's knowledge or by
falsely stating that the consumer would not be approved for credit
unless they purchased a PPI policy alongside a credit product. They
also mislead the consumer to believe that the policy was suitable
for their circumstances when it was not.
Any time a PPI policy was sold where the PPI company was
deceitful, then it has probably breached the rules on insurance
sales, which are regulated by the Financial Services Authority
(FSA). In these circumstances the sale would be classed as invalid
and the policy is said to have been mis-sold. In every case of PPI
mis-selling, the consumer is entitled to a full refund of all
policy premiums that they have paid.
If you have a PPI policy then it is worth consider making a
claim for PPI mis-selling against the company that sold you the
PPI. The Financial Ombudsman Service, an independent PPI complaint
handler, found that over 90% of PPI cases were in favour of the
consumer and has already ordered every PPI company to pay back
consumers millions of pounds worth in compensation.
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