PPI mis-selling and the secrets behind it

The aftermath of the loan insurance scandal

by Russell Shackleford, 23rd September 2011

Recent studies have gone to show the true extent of the PPI mis-selling scandal which forced thousands of consumers to pay out vast sums of cash in exchange for worthless insurance policies wherein insurance brokers sought only to line their own pockets in the most vile fashion imaginable by any human.

PPI, or Payment Protection Insurance, in its ideal form, should protect a borrower from the possibility of defaulting on their loan. This is made possible by offering coverage which means that, should they lose a major source of income without forewarning, they will receive a substantial payout which enables them to ensure that they will not necessarily default on the loan, due to their receiving a large sum of money to assist them in their moment of financial need.

However, the banks which mis-sold PPI never intended on providing this, seeking instead to make a fat profit off the premiums, and it is for this reason that they foisted PPI policies on people who did not need them and may have had insurance coverage elsewhere, could not claim on them due to their circumstances rendering the PPI policy invalid, or even were not made aware that they would be expected to pay extra for a loan insurance policy that should have been optional.

These are the main forms that PPI mis-selling took, and so many millions of people were affected by it that a judicial review arose in order to force the banks to pay back the money they had essentially scammed from people.

The FSA fought against the banks in court and, fortunately, eventually met with victory, meaning that billions of pounds have now been set aside by high street banks as a means of compensating those customers who had their coffers emptied by the extensive scandal of PPI mis-selling.