PPI is intended to cover loan repayments and credit card debts in times of crisis such as illness or redundancy thus providing some comfort and piece of mind to borrowers.
Changes need to be made to the aggressive selling of this type of insurance according to the Financial Services Authority (FSA). Over 180,000 complaints have been rejected by companies but 80% of those investigated by the Financial Ombudsman have been up held in favour of the customer.
Some PPI Problems
- PPI can incur very high costs up to 20% of the loan value in some cases.
- PPI can be hard or impossible to cancel.
- Sometimes the policies are bought alongside a loan without the customer being made aware they are paying for this insurance.
- There appears to have been aggressive and mis-selling of PPI
- In some cases all the premiums on say a three year loan were due up front and the cost was added to the loan so customers also paid insurance on top.
How To Deal With PPI Misselling
- If you have had a claim rejected unreasonably then request a review and make a claim via the Financial service ombudsman if still unsatisfied. See: PPI at Financial Service Ombudsman
- If you think there was mis-selling you may have a valid case if you were self-employed or unemployed when you bought cover.
- A claim can also be made if PPI was added to a loan without the salesperson telling you that you were purchasing the cover.
- Making a mis-selling claim if you were told the loan would be refused unless you took out the insurance.
- On future loans consider if you need the comfort PPI may provide or you are just giving the lender higher profits. Check your other insurance that may already give adequate cover like Disability, Critical Illness insurance or Life Assurance.
2 comments ↓
When making a complaint about PPI, it is important for customers to be aware of whether they do have a right of referral to the Financial Ombudsman Service. Normally this is the case for policies sold after 14 January 2005, but for PPI sold before this date it could be worth checking with the Financial Ombudsman Service as not all sales were regulated before this date.
Yes, if the sale fo the PPI was BEFORE 14 January 2005, the Financial Ombudsman Service will rule that the claim does not fall within its jurisdcition. If that happens, the PPI policyholder may not be able to make a successful claim, if the financial business which sold the PPI refuses to accept the PPI was mis-sold.
It’s worth bearing this in mind if thinking about making a claim.
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