Payment Protection
Payment Protection Insurance (PPI) was originally developed as a means of safeguarding customer repayments in relation to mortgages, loans and other financial agreements such as credit card accounts. The PPI policy was intended to ensure that monthly payments would continue to be made if, for some legitimate reason, the customer was unable to pay. A good example might be paying a customer’s mortgage in the event that he or she was made redundant or seriously injured.
In theory, PPI was a helpful form of financial protection but, in practice, the cover was badly mis-sold and millions of customers suffered as a result. Despite accounting for as much as 40% of customers’ monthly repayments, many PPI policies were unfit for purpose. Only 4% of PPI policies ever produced a claim and, of those, approximately 25% were then rejected by the insurers.
Worse, many customers paid high premiums for PPI packages on which they could never make a valid claim and others were told, quite wrongly, that the PPI cover was compulsory. Others were never made aware that they were paying for a PPI policy at all. For these and a wide range of other reasons, the UK courts ruled that the banks and other financial institutions had mis-sold PPI cover and must compensate those customers who had been affected. Since that ruling, they have set aside around £9 billion to make those reimbursements.
The Many Forms of PPI
Have you fallen foul of mis-sold PPI? Payment Protection Insurance has taken a variety of forms in recent years and might have been sold to you under any of the following names:
- Loan protection or loan cover
- Employment cover
- Sickness / illness cover
- Accident cover
- Credit card repayment cover
- Hire purchase repayment cover
Such polices have been sold to customers taking out a loan or engaging in some other financial agreement such as a hire purchase contract.
If you have purchased any such policy then there is a very good chance that it was mis-sold and that you may be owed money as a result. An average PPI claim has a value of around £2,400 and takes between 8 and 14 weeks to settle.
