The Reason For PPI Claims

Written By: Bradley Jenkins-Cooper on June 14, 2010 No Comment

If you have ever taken out a loan, credit card or finance agreement it is likely that you will have been offered payment protection insurance (PPI). This has been thrust into the forefront recently with reports that many customers were mis-sold this insurance. This has seen a major rise in PPI claims for compensation. Many people making these claims won their cases and the UK is now expecting a ban on the sale of cover at the same time as loans.

The idea behind PPI was that it would protect the consumer in the instance that they ever lost their income due to sickness, accident or redundancy. The problem was that many sellers either forced this on their customers or made them believe it was necessary in order to complete the credit agreement.

There are large seller incentives and because of this sellers were pushing the insurance on customers whether or not they were eligible for it. It has also been claimed that some sellers added Payment Protection into customers agreements without telling them.

For some people PPI is pointless are they will not be covered. Those who are self-employed, retired or have an a medical condition that was there before the policy was taken out are unable to claim.

Several complaints were received by the Competition Commission stating that loan providers have an unfair advantage in the sale of insurance. This resulted into an investigation into the sale of the insurance. This investigation found that the consumer tends to lose out when cover and a loan or credit card are sold alongside each other.

Banks proved to be the worst offenders with their staff regularly misinforming customers or failing to fully explain the conditions and costs of PPI.

Following this the Commission recommended that ASU and loans should not be sold together. The suggest at least seven days should pass after completion of a loan before customers are offered the insurance.

Barclays Bank appealed this decision claiming it would adversely affect consumers. This sparked another probe by the commission into the validity of this claim. They have now decided to uphold their original decision.

These revelations brought with them many consumers making claims for compensations after realising they too were mis-sold the insurance. There are also a number of compensation solicitors now encouraging consumers to check if they are eligible to claim and the whole business has become a major money maker. The financial lenders however are now finding themselves in a situation where they need to pay back large sums of money to their customers.

If you are thinking about making a claim you need to check when your insurance was taken out. Sales only became under the jurisdiction of the FSA in January 2005. Agreements taken out before this date are not subject to the latest rules. However if you wish you can put in a complaint to the Financial Ombudsman. Then they can launch an investigation into whether you have a claim based on earlier rules.

Looking to get your cash back from mis-sold-ppi? Then visit www.PPIClaimsUK.co.uk and reclaim PPI payments today.