Approximately twelve million payment protection insurance polices were sold to people who took out loans and credit cards in the U. K. According to the findings of published by the Competition Commission, the vast majority of the policies were bought at the same time as the loan or credit card was issued. Many individuals purchasing a policy were either completely unaware of the fact that they could get it at substantially lower costs from other providers, or had it mis-sold to them in one way or another. It was even quietly slipped into some clients’ loan-agreements without their knowledge or consent. Because of the questionable sales practices the were involved, a high number of PPI claims that were filed with the Financial Ombudsman have been successful.
Payment Protection Insurance is extremely profitable for the banks and businesses that sell it alongside credit cards and loans. One estimate put the total annual revenue generated by it at well over five billion pounds sterling. Of that, four billion is reportedly pure profit. It is therefore not surprising to discover that some banks offered bonuses and incentives to their employees in an attempt to drive up sales.
Complaints began to surface as people filing what they believed were valid claims had them denied in high numbers. They were often told that they were ineligible for some reason or another. It became increasingly obvious that the insurance was being mis-sold. Intended as coverage for loan and credit card payments in the event of unforeseen job loss, it was being now sold to self-employed individuals, pensioners, and others who were ineligible for one reason or another. A fair number of policyholders appeared to be completely confused as to what its purpose was.
Stories about high-pressure sales and product misrepresentation were also soon circulating. Banks advertised inexpensive loans, however when the PPI was added on to them they turned out to be even more expensive than what the competition was offering. Some customers have claimed they were even refused loans unless they took the insurance also. Other people tell of not being permitted to cancel their insurance, or being told that in order to do it they would need to repay the existing loan and take out totally new one.
The Office of Fair Trading received a complaint from the Citizens Advice service in the fall of 2005. The complaint, along with another one that they received from the National Consumer Council, spurred them on to opening an investigation into the matter.
Even the Financial Services Authority sat up and took notice of what was happening. It eventually took action against some well-known bank, as well as insurance brokers and several car-dealerships that had been selling their customers policies alongside car loans. Substantial fines were levied on the offenders.
In January of 2009, the Competition Commission leveled a complete ban on sales of single-payment policies. It also barred companies from selling standard policies alongside credit-cards and loans, or approaching clients within seven days of their having taken out one. The decision was immediately challenged by the banks who claimed that it put the customers at risk. In mid-may of this year, the decision was upheld.
Some of the individuals whose claims were denied, were mis-sold a policy, or were not permitted to cancel one, may be entitled to compensation. Anyone needing further information about PPI claims should contact any one of the organizations that specialize in the matter. They will be able to provide assistance.
Learn more about PPI Claims. Visit www.PPIRecovery.com where you can find out all about how to make PPI compensation claims and start to get your cash back.
