Thousands could miss out on PPI reclaim
by Luke Whitmore, 17th May 2011
Many consumers seeking to make a PPI reclaim may not get the
opportunity to receive the refund directly, the Which? website has
reported.
The consumer association has warned borrowers who are intending
to submit a PPI reclaim that, for those currently undergoing
bankruptcy or involved in an Individual Voluntary Arrangement
(IVA), most of the refunded money is likely to go towards paying
off their debts.
In some cases, those who owe money to the lending institution
from whom they are reclaiming PPI are likely to simply see the
amount of debt reduced, without seeing any direct monetary gain
from the refund. Others could have the refunds automatically sent
to their creditors, or be required to report this windfall to those
managing their bankruptcy or IVA.
The Which? website notes that any compensatory payouts, rather
than simple refunds of premiums already paid, may go directly to
the claimant - but they may still be required by law to put that
money towards paying off their debts, meaning that they will not
see any direct gain from the PPI reclaim process.
While some debtors may be disappointed by the news, it is
pointed out that it is still worth applying for a PPI reclaim even
when heavily in debt, as it will still go some way towards paying
off the money owed, speeding up their personal financial
recovery.
After the banks' capitulation in their court case against the
Financial Service Authority last week, financial institutions have
been putting aside money to cover the compensation they will now be
expected to pay out to customers who were mis-sold PPI.
PPI, or Payment Protection Insurance, is a loan insurance scheme
intended to ensure that customers are still able to make repayments
if they should lose a primary source of income. However, it was
found that recently PPI had been mis-sold to borrowers who did not
want it, could not use it or even did not know they were paying for
it, spurring many consumers to complain to their banks for a refund
of these often-worthless insurance policies.
If you have been mis-sold PPI, we can ensure that your PPI claim ends up in the right
hands.
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