PPI Story – Payment Protection Insurance

PPI (Payment Protection Insurance) is an insurance, which is sold to you with a mortgage, loan or credit card.

Payment Protection Insurance (PPI)  policies are sold to cover loan or credit card repayments in case of accident, sickness or unemployment. They are also known as Accident, Sickness and Unemployment cover (ASU), Life & Accident, Sickness and Unemployment cover, Mortgage Payment Protection Insurance, Personal Loan Protection, Credit Card Repayment Protection and more.

There is nothing wrong with these policies but in 90% of the cases there is said to have been mis-sold PPI by overzealous sales people (see case studies).

Consumers often buy PPI because they think it will enhance their chance of getting credit, and most are unaware that if they do want the insurance they will often find a cheaper standalone policy. While these can cost as little as £2.65 for every £100 being covered, some lenders charge as much as £28. In June last year, the Competition Commission concluded that banks and credit card companies were overcharging their PPI customers by a total of £1.4bn a year. They found that banks were pocketing around £1,200 from a policy that costs them just £20.  Source: BBC News

"It is particularly unacceptable for a firm to train its advisers to put pressure on customers when recommending insurance cover which they have not asked for and may not need. Firms cannot rely on paperwork sent out later as an excuse for unclear or misleading statements given on the telephone." - FSA enforcement director Margaret Cole

In practice, these policies were often sold without much investigation in order to boost companies profit margins and commission for the advisers. This enabled the banks during the period of the late 90’s and early 21st century to continually posted record profits culminating in March 2006 with the ‘big five’ banking groups Barclays, Royal Bank of Scotland LloydsTSB, HBoS and HSBC posting combined record profits of £33.19 Billion.

A good sales process should fully inform you of the costs, advise you the policy was optional, give you full details and policy documents, ask about any pre existing medical conditions you may have had, ask about your employment status and much more.

If you have a mortgage, loan or credit card then there is a very good chance you were also sold a PPI policy, we can find out for you. We may be able to make a PPI claim worth £1,000s on your behalf.