Payment Protection Insurance (PPI) has been added on to financial agreements over the last decade to cover customers monthly outgoings. The policy was put in place to cover customers in the event that they would become redundant, have an accident or become ill and were unable to pay their monthly instalments.
As a product PPI was appealing and was considered as necessary as travel, health, or phone insurance. In reality, many people who took out PPI alongside their credit cards, loans and mortgages found that it was provided without consent or didn’t meet the PPI criteria necessary to make a claim if required. This resulted in the PPI being mis-sold.
The Financial Conduct Authority (formerly the Financial Services Authority) provided a report in 2005 establishing that banks and lenders were not keeping to the rules when selling PPI to customers. They found that PPI contained so much detail in the small print that it was difficult for sales staff to adequately explain the cover at point of sale. They also established that sales staff were not able to identify if a customer was eligible for the insurance due to large amounts of criteria in the paperwork. The FCA discovered that banks and lenders were not making it clear to customers who did not qualify, that they were only eligible to claim under certain sections of the insurance policy.
The report led the FCA to fine smaller companies for mis selling PPI and during this time, established further evidence of poor compliance. Due to the findings, 24 companies entered enforcement procedures for poor selling of PPI.
The bill rises
In April 2010, the banking industry lost a high court case to stop customers demanding compensation. The announcement led lenders to set aside potential payment provisions which reached totals in the billions.
As of July 2014, the total PPI bill is £16.3 billion and is continuing to rise.
If you think that you may have been mis-sold PPI a claims management company is the simplest way to claim the compensation you are owed.