PPI – who to blame?

When it comes to loans, lenders and loaners alike will do anything possible just to protect themselves from any possible complications. For the lenders, they want to keep the money flowing even to a point that it can be harsh. For the loaners, they want to pay for the installments at the right time in order to avoid any repossession consequences. Or worse, experience criminal accusations. There are a lot of policies that heed this need of both sides. In the UK, the most common one is the PPI or the payment protection insurance. This policy ignited a lot of financial issues and controversies even though it posed some very valuable cushion for the continuity of the cycle. It can be misleading to think that something that looks pretty helpful could ignite such conflict. So without further ado, let’s look deeper into payment protection insurance.

PPI or payment protection insurance is a policy that obviously, protects the borrowing population and to an extent, the moneylenders too. PPI gives proper due to people who are incapable of paying for their installments on the said time of their contracts. The policy came in time to rescue people who have been terminated abruptly due to the recent financial crisis. With more and more companies becoming bankrupt, there will be a lot of lay-offs on installment payments. PPI can cover for the individuals who are not earning anything as compensation for the installments. It’s a great way to stay afloat without ever having to fear for their properties. Also, payment protection answers the call when the most uncertain and unexpected of incidents happen to a client. Incidents such as contraction of deadly disease, involvement in an accident, redundancy or even death can trigger the PPI to pay for the installments. For a period of 12 months or 1 year, the payment protection insurance will be paying for all the installments. And if during that time the payment is not yet complete, then an individual is obliged to once again apply for a policy.

At first look, you’ll never realise that PPI could ignite such conspiracies. That’s because the real problem does not lie on the policy itself. It’s actually on how people acquire it. Moneylenders give PPIs to clients without any thought on whether or not they need it. Most of the time, they’ll tell their clients that no loan will be present without getting the policy as well. Or in a deeper sense, they’ll just give the client a PPI without the latter ever having knowledge of its presence. And in the end, clients will be wasting valuable amounts of money on something that will only be voided! The usual groups of people that fall victim to the conspiracy are the self-employed, the students and recent graduates, and retirees. All of which have in no way any need for the policy.

The rampancy of PPI does not stop there. Even establishment owners who give away special incentives to frequent buyers have been suspects of giving away this policy without the knowledge of the latter. Don’t be surprised to find your discount card all of a sudden containing payment protection with the claim being fine-printed at the back.

Truly, the cash losses due to this policy are quite appalling. And the banks on their part, have not made any effort on repaying all their debts to almost all of their clientele, with an estimated 85% of all reclaiming requests rejected due to what they say are insufficient evidence.

The PPI is a problem. But who can people blame here? The banks? Or the people themselves for not taking the time to read up on their loan policies? You be the judge.