Payment Protection Insurance or PPI is an insurance product that covers your debt repayments in case you are unable to work due to an accident, illness, or if you involuntarily lose your job. PPI has come under intense criticism after studies found out that most people who have been sold PPI can never make a PPI claim, while others were compelled to buy the insurance products by the banks. This is done by telling consumers that PPI is a compulsory product that must be purchased before they can take out a loan. Other incidents involve banks or brokers not clearly explaining the merits and consequences of a PPI policy to the consumer. That is why millions of people have complained to different entities just to make PPI refunds.
PPI Complaints Surge
In January 2011, there was a reported 40% surge in the PPI complaints and the Financial Ombudsman Service or FOS. The FOS handles individual financial disputes between banks and consumers. For the years 2010-2011, there is a forecasted 70,000 PPI complaints, which is well above the estimated 46,000 cases of which it is budgeted. As a result, the FOS will fall short of its target of resolving 210,000, cut down to 180,000 because of lack of budget.
This surge in complaints is expected to slow down the operations of the FOS, even as it resolves many complaints in a day. In its defense, the FOS points to the unprecedented number of complaints that come in everyday, causing some backlogs. Meanwhile, Individual complaints are also taking quite some time to process. The FOS accuses businesses of being uncooperative with procedures, which is causing delays in resolving complaints.
Due to the slow proceedings at the FOS, people are constantly looking for other options that could take care of their PPI concerns more efficiently. For many people, that alternative option is the claims companies. Claims companies are becoming more and more popular in the UK due to the abundance in PPI complaints. People flock to claims companies because they handle cases promptly and go after banks, even pursuing cases to great lengths. Claims companies are very attractive because they have no upfront fees, meaning that people do not have to pay them anything for their services until a case is won for them. Claims companies who offer help to PPI policyholders are similar to the law firms that offer no win no fee litigations. You only have to pay claims companies AFTER your case is won in the small courts. How much is paid? Around 25% of your PPI refund is shared with the claims company as a service charge, which not a bad thing, because you will still gain awards from your PPI refund.
Banks Back Off
Many of these banks have stood down and stopped the selling of PPI. Lloyds Bank along with its subsidiaries, are no longer selling PPI. Neither are they the first major UK bank to do so; previously, Alliance & Leicester Bank of London and many other banking goliaths have stopped selling single premium PPI in the UK. Because of the trauma of the PPI controversy, it is expected that all UK banks will back out in selling the insurance products to consumers.
There are still insurance companies that sell PPI if you are really looking for it. However, you must make sure that your credit rating is at the very least good, otherwise, it will be difficult for you to buy a PPI. If you want to obtain ppi refunds with professional help, there are companies out there that can handle this for you for a set fee.