How to find out if you’ve been mis sold PPI

The popularity of Payment Protection Insurance has caused quite a rush for people who want to avail of the service. Because Payment Protection Insurance allows for a convenient way to secure payments for any loans that you might be purchasing, they have become an ideal choice of safeguarding any loans that people are securing nowadays. Whether one will be getting loans for their vehicles or their homes, it has been advised that securing Payment Protection Insurance is the best option for everyone.

But because of its popularity, most people often do not realize that there can be drawbacks to such. Because the service of Payment Protection Insurance is basically an option that will provide more revenue to creditors, it makes their selling such a priority that some people who may not even opt to apply for the insurance end up having it without their knowledge. There are also some people who will get Payment Protection Insurance without any clear clues on what it is really about. To find out if you are one of them, here are a few things that you could look into

How to Find out if you Have Been Missold Payment Protection Insurance

The first thing you would need to look into is the process in which you have been offered. If you have been given no choice about taking out PPI, then you have been missold Payment Protection Insurance. Another thing to figure out is if you have been informed of the basic qualifying factors that Payment Protection Insurance has, like exclusions for pre-existing medical conditions. If you haven’t then it is another sign. Continue reading

Features of payment protection insurance

Payment protection insurance does what every other insurance does – provide security in case of losses due to risks that you are insured against. Then what is payment protection insurance and how does it differ from the other types of insurance?

Payment protection insurance, or PPI, is an insurance policy specifically taken out to cover repayment of outstanding loans and mortgages in case of a debtor’s inability to make the payments due to death, involuntary unemployment, and disabilities by reason of sickness or accident. This is a protection to ensure that interests will not shoot up in the event that you will be unable to pay your obligations. These four causes are exclusive  so that, when you cannot pay your loan because of other grounds, you will not be able to file a claim under this policy.

Payment protection insurance is not compulsory, contrary to most belief that you are required to purchase one after taking out a loan or mortgage. You may need PPI, and you may not. To avoid unnecessary expense, assess your situation. Is it likely that you are going to lose your job before you can pay out your current loan and other obligations? If you are up-to-date in paying your credit card monthly dues, there is no reason for you to purchase PPI. However, if after making an assessment and you find out that you need one, then you can still get a PPI coverage.

When taking out payment protection insurance, or any type of insurance coverage for that matter, it is important to know that an insurance policy is a contract of adhesion where you are to agree on everything that is stated therein once you have signed it. The policy contains all the exclusions and exceptions of the insurance coverage, and it is usually filled with fine prints. There is nothing to worry about this. Just take your time in reading every detail carefully and you will not be misled.

If you have a secured income-generating activity, you do not need PPI. If you are employed, most probably you are entitled to a certain period of paid sick leaves. If it is unlikely that a redundancy program becomes necessary in your workplace, there is no risk of unemployment. If you have a similar policy which covers the risks enumerated in your PPI, then getting another policy may just be unnecessary.

Not everyone is entitled to claim under PPI. There are a number of reasons why a claim is being rejected by the insurer. If you are under eighteen or over sixty-five years of age you are not entitled to any payout for your loan repayments. If you are working only in a part-time job, or you are self-employed, or just a temporary or a contractual worker whose contract is about to end, you are also not eligible for any claim under a PPI policy. If you have an information that you are about to be declared as redundant by your employer, you will not be entitled as well to the benefits of PPI. And this operates also against someone who is aware or should be aware of an existing medical condition.

Redundancy does not apply if you are working in a family business because you can never be kicked out from a company that you own in part. You will also not be able to claim under this case if you volunteered to participate in any form of redundancy program. These are most of the exclusions that you may find in the fine prints of the insurance policy.

When you have decided to buy your ppi, remember that you are not required to take it out from the same company which granted you the loan or mortgage. You have the option to purchase it from another financial institution, where it is called a stand-alone payment protection policy.

A brief history of PPI mis-selling

For many decades, Payment Protection Insurance or PPI has been created by financial security architects to protect banking firms, lenders, and clients against unforeseen disasters that would lead to unpaid monthly loans. However, it is only during the last years of the 1990s that the difficulties resulting to mis-sold PPIs came into light. Payment Protection Insurance Mis-selling is the bane of the financial security world.  Aside from the lost of protection, financial clients, bankers, and lending companies also lose colossal amounts of profits due to mis-sold PPI claims.

There are many stories pertaining to mis-sold PPI that have appeared in newspapers and magazines, traditional and online. This created a certain degree of awareness among people about the policys expenses as well as the vulnerability of PPI claims. Around about 2005, leading broadsheets all-over the United Kingdom continued to underscore PPI expenses as well as many cases featuring people who failed to use their financial cover due to mis-sold PPI. The sad part is that this financial protection mishap occurred even during the existence of a good financial cover. Not long after the wide media coverage regarding mis-sold PPI claims, the Financial Services Authority or FSA took action by controlling the sale of worthless PPI policies. In 2005, the Citizens Advice Bureau released a report that highlights PPI claims issue.

In November that same year, the Financial Services Authority sent a communication letter to various banking firms and lending companies. The letter draws their attention about certain mis-sold PPI problems. It also campaigns against mis-selling gains caused by these illegally sold products. From 2005 until today, the number of mis-sold PPI cases has escalated to an alarming level. As a result, bankers and lenders soon tasted the retaliation of the FSA. The campaign proved to be a successful one. A lot of bankers, lenders, and clients came out in the open about their mis-sold PPI claims. Through the help of the FS and the Financial Ombudsman Service or FOS, victims have been compensated well.

In 2010, however, banking institutions and financial lending companies started to file a case claiming about the legitimacy of their policies. In effect, the case led to the refusal of banks and lending institutions in handling mis-sold PPI as well as PPI associated complaints. This more than a decade long experience of banking institutions, financial lenders, and clients has helped resolving cases against mis-sold PPI claims in the present.

New Figures Show PPI Claims Nearly Doubled in 2012

Recent figures from the Financial Services Compensation Scheme (FSCS) have revealed that the number of claims submitted in 2012 for mis-sold payment protection insurance (PPI) was almost double the number from 2011. Just over 11,000 claims were submitted in 2011, whilst the number jumped to more than 19,000 in 2012.

A lot of this is thought to be because of the Financial Services Authority (FSA) ruling that third party companies could become involved and make claims for people, rather than the banks only being able to deal with the customers they have defrauded directly. With people not needing to worry about the claims themselves and instead able to enter their details into a website, then have somebody else contact the bank on their behalf, many more people are coming forward to claim the money that they are entitled to.

The banks were utterly opposed to the idea of third parties getting involved, claiming that it would be unfair and that the consumers would benefit more if they went through the process themselves. However, the rocketing number of claims paints a different picture.

One of the other aspects which is likely to have resulted in more people making claims is the repeated media coverage. Every time that the banks try to resist paying PPI compensation, such as the recent debacle with setting a deadline for PPI claims, they make the headlines again, and more and more people are reminded to check if they are entitled to compensation for PPI payments.

There will have to be a point at which the number of claims begins to fall, but it is certainly not in sight. The main issue for the banks is that there were so many products which they tacked PPI services onto. Credit cards and loans were the main offenders, and the number of those which were taken out whilst the PPI scandal was still ongoing is truly staggering.

It’s worth bearing in mind that the total number of claims paid out is not even the total number of cases which were brought up or that are still ongoing. The last three months of 2012 saw 11,000 cases brought to the attention of the Financial Ombudsman Service, for instance, making up the same amount as the total claims paid in 2011. It’s clear that there are a huge backlog of claims to work through, and we will not be hearing the end of PPI for a long time yet.