The Basic Question – What is PPI?
PPI stands for Payment Protection Insurance, PPI is an insurance policy that has been sold alongside loans, credit cards, car finance and mortgages. The insurance is designed to cover your repayments on the borrowing should you be unable to do so as a result of illness, injury or unemployment. It has been included in credit agreements by banks, lenders and brokers for the last 20 years and was a rich source of profit for those who sold it.
People are able to make PPI claims because their policies were mis sold to them, PPI policies have been mis sold in a number of ways and all of them come under one major infringement – professional negligence. Ways PPI have been mis sold include:
• The cover wasn’t adequately explained to the client
• The policy was over-priced
• The policy was sold to a customer who didn’t need it because they were already covered
• The cover was compulsory in order to get the loan
• The policy was hidden inside the loan without telling the customer
• The customer couldn’t use the policy even if they wanted to, due to age, employment or illness circumstances
We’ll discuss these in a little more detail now:
Cover Not Explained
PPI policies are notoriously specific about what they will cover, which is why a potential policy holder should always be questioned to make sure their situation doesn’t invalidate their insurance. If the PPI sales person didn’t explain the policy to the customer and check their circumstances met the requirements then this could be deemed mis-selling.
The majority of PPI policies were sold alongside loans and credit cards at the point of agreement, meaning that customers were inclined to go with the lenders cover. This has lead to mis-selling because the polices were often over-priced compared to other independent policies available on the open market. Financial consumers were also forced into taking out PPI in order to get the loan allowing the lender to price the policy at any level they wished.
The customer didn’t need cover
When selling the policy to the client the sales person should’ve asked if they also had insurance that would already cover repayments on the loan. If they didn’t ask and the customer signed up for PPI then all of the subsequent monthly payments were needless and can be claimed back.
The cover was compulsory/hidden inside the loan
Many lenders included PPI in with loan agreements as a matter of course, making it a compulsory purchase for financial consumers. A few lenders even told their customers that they had to take out a PPI policy in order to get the credit and a handful included PPI without even telling the customer they’d have to pay for it each month. These are all examples of mis-selling.
The customer couldn’t use the policy
Many PPI policies were legitimately requested by the customer but were not fully explained to them, leading to the cover being invalidated. Examples include medical conditions, self-employed status or age-related clauses that allowed the insurer to duck their responsibilities.
If you have taken out a loan or mortgage, acquired a credit card or entered into any form of credit agreement in the past few years you may have also signed up for a PPI policy without realising it. Some lenders included a policy without telling the customer, hiding it deep in the paperwork. Aside from not giving you the choice to take PPI or not; this is also mis-selling because you were not adequately informed of your right to shop around.
The only way to know whether or not you have a hidden PPI policy is to check your loan paperwork and monthly cost breakdown. If you don’t have the original loan paperwork then you can contact your bank and ask for it, just DON’T MENTION PPI CLAIMS, say you want it for your records – banks have a habit of dragging their heels when PPI claims are concerned.
If your loan finished over six years ago you may find that your lender doesn’t have the paperwork associated with it as they can legally destroy it after this period.
Almost all the major banks, lenders and finance houses in the UK have issued PPI refunds including the following lenders:
• Black Horse
• Capital One
• Bank of Scotland
Almost all banks, lenders, credit card providers, brokers and car finance companies can be claimed against because they all sold PPI policies alongside loans or credit.
There are two options you have when claiming back PPI payments, one is doing it alone using template letters and the other is using a PPI claims company.
123-Refund Limited of 1st Floor Suite 1s, The Post House, Adelaide St, Swansea, SA1 1SB is a registered company in England & Wales with registration 08203063 and are regulated by the Claims Management Regulator in respect of regulated claims management activities. Its registration is recorded on the website www.gov.uk/moj/cmr. Authorisation No: CRM31181.
Our Information Commissioners Office (ICO) Registration Number is: ZA115110.