What does mis-sold PPI mean for the banks?

The future of Payment Protection Insurance

by Luke Whitmore, 24th May 2011

Mis-sold Payment Protection Insurance is expected to cost the banks dearly, with billions of pounds now having been set aside for compensation. But is PPI always bad?

With all the talk of Payment Protection Insurance mis-selling, one could easily believe that it was a rotten product across the board. Nonetheless, this much-maligned insurance scheme does have its uses, as long as the borrower knows what they are getting into and what they will be paying for, and ensures that their policy is applicable to them and covers the situations they would expect it to.

The problem with the PPI scandal is that it was treated as the default in order to line the banks' pockets, rather than approached as specialist insurance which ought to only be taken on by those who understand what they are doing.

Especially in these times of economic uncertainty, it is a shame that many may have been discouraged from taking out a PPI policy which could actually provide them with some additional financial security - though it is worth noting that, with many policies, believing that you may soon be made redundant is enough to disqualify you from making a claim.

With complaints about other specialist insurance now on the rise, it seems that the banks have been, and continue to be, mis-selling more than just PPI, though the loan insurance was probably seen as an easier sell to consumers who did not know what they would be paying for, with sneaky phrasing allowing brokers to slip PPI in without the borrower really consenting to a policy.

While PPI is not, on the whole, bad, sadly the majority of policies out there are now known to be inappropriate, expensive and useless due to the customer's own situation. However, there is little doubt that the banks will soon latch on to some new way to leech profit from the consumer.

If you were mis-sold PPI, we can assist you with PPI reclaiming.

Claims Financial