PPI misselling issues
Financial institutions are no longer permitted to sell PPI at the same time as loans. People who would like to purchase PPI can instead elect to have a standalone policy that is a regular monthly premium. The reason for this is that many payment protection plans were not sold according to the correct guidelines over the years. Quite a number of PPI claims brought to the Financial Ombudsman Service are awarded in favour of the customer. This indicates the extent of the problem with PPI and gives hopes to consumers who have tried and failed to obtain compensation from their lender. Complaints about payment protection insurance have been rising sharply. The FOS has alread informed us that it is dealing with a record number of PPI complaints.
So why are people complaining about PPI and what is the issue with this type of insurance?
A major reason for complaint is that people felt compelled to take out payment protection insurance. That is to say, the loan provider would make it clear that the loan application would likely fail because the consumer chose not to take out PPI. Some people have reported that lenders went a step further by forcing them to take out payment protection insurance.
It is not in the interests of each and every person to take out PPI insurance. Those with a pre-existing medical condition, for example, may not be able to claim on the policy if the condition reoccurs and they are unable to work. Other medical conditions are also not covered, for example back related problems and stress. Payment protection can also be unnecessary for students. This is due to the fact that is it difficult to claim successfully if you cannot demonstrate proof of income.
The monthly repayments when PPI is sold with a loan can be up to 30% higher. This is because interest is also paid on a single premium policy. This fact should be disclosed during the sales process but the reality is that some lenders failed to mention this. To pursue a successful claim, people need to gather as much evidence as they can about the way the policy was sold to them.
It is also helpful to have a copy of the credit agreement. It is a lot more simple to make a complaint if you have the relevant facts to hand. Some claims are unsuccesful. Some are initially rejected by the lender. At this point the consumer needs to understand why the complaint was rejected and what options are available to them. The FOS has said that half of all consumers throw in the towel when the complaint is initially rejected. Some people do not understand how to proceed to the next stage.
There is a plethora of information around to help people with making an appeal. To give an example, there are a number of PPI articles available. Anyone who doesn’t have the time and energy to handle the claim on their own can engage the services of a claims management company. CMCs can handle payment protection complaints usually on a no win no fee basis. The good thing about this is that the customer can forget about dealing with the whole process. They can simply leave the paperwork for the claims management company to deal with.
