Mis Sold PPI
PPI claims are being made by thousands of people throughout the UK, are you one of those that is missing out?
Payment Protection Insurance (PPI) is designed to cover your monthly loan or credit card payments if you are unable to meet the payments through redundancy or being unable to work due to illness or accident. But for years loan and credit card providers have routinely mis sold PPI insurance policies to people who just don’t need it, because of this many lenders such as Alliance & Leicester, Egg, Capital One and HSBC have been fined and thousands are now doing a ppi reclaim.
So why is PPI mis sold so often?
Loan and credit card providers make more profit from insurances sold alongside the loans than on the loan itself. At present there are approximately 20 million PPI policies in the UK, this generates about £5 billion a year for the companies involved. In most cases the insurance cost is more than the interest on the loan.
With so much profit at risk it is no wonder that staff were selling as many of these products as possible. Then in June 2008, after a 15 month investigation into PPI, the Competition Commission found the following average pay-outs:
Car Insurance: 78%
Home Insurance: 54%
Mortgage PPI: 28%
Personal Loan PPI: 15%
Credit Card PPI: 11%
This means that for every £100 insurers take on car insurance they pay £78, on loan PPI they pay out just £15, and most of this profit goes to the lenders, not the insurance companies!
Am I paying for PPI?
If, in the last 10 years, you have taken out a mortgage, loan, credit card, store card or any other loaned finance, you may have had PPI included as part of the agreement.
For loans the PPI may be a single-premium policy, which will be shown on your loan agreement as a lump sum added to the loan. For a credit card the PPI charges are added to your account each month, and this should be shown on your statements.
You will need to go through your agreements and look for any mention of an insurance payment – it may be worded as ‘payment cover’, a ‘protection plan’, ‘ASU’, ‘loan protection’ ‘loan care’ or similar. If you’re unsure you can contact your lender and ask.
If you have been paying for PPI that you didn’t know about, it’s worth investigating.
Was I mis sold PPI?
You may have been mis-sold PPI if:
You didn’t ask for PPI, but it was added to the policy anyway
You were told the insurance was compulsory, or that you would have a better chance of getting the loan approved if you decided to take it
You were not aware that including PPI was optional, or that you could purchase cheaper PPI cover elsewhere
You were unemployed, retired or self-employed when you took out the cover
If you bought your loan or credit card online reclaiming your PPI is more difficult as the full terms and conditions of the loan or credit card are usually available on the website. But if you signed up with a loan or credit card provider that was using pre-ticked boxes, you may have had to opt out of the insurance rather than opt in. This was stopped in July 2007 but if your loan or credit card was taken out before this date you need to check to see if you have bought PPI insurance without knowing it.
If you bought face-to-face or over the phone it is up to the salesperson to ensure that you understand the terms of the PPI and that the policy was appropriate. If you feel you did not understand the process, then you could be entitled to claim back PPI.