Payment Protection Insurance (PPI)
What is PPI?
PPI has been the single most lucrative, profit generating product the British banking industry has ever seen.
It has also turned into its worst nightmare because it was mis-sold on an industrial scale to people who didn’t want it, didn’t need it and, in many cases, didn’t even know they had it and now the banks are having to pay back billions in compensation.
Payment protection insurance is a good product. It is designed to allow you to meet your payments on a finance agreement if you come out of work through accident, sickness or unemployment.
It’s meant to give you peace of mind that you won’t fall into arrears with your finances and has performed well for thousands of people and was sold as an add-on to loans mortgages and credit cards.
Claiming PPI Back
But for millions more it was a different story.
Research by the Citizens Advice Bureau showed that only 15% of policy holders were able to make a successful claim. The success rate for motor insurance claims is 74% and 55% for household claims.
As with any financial product, the banks should have ensured proper advice was given to their clients on whether or not PPI was suitable for them. But sales staff were highly incentivised to sell as many policies as possible.
If proper PPI advice wasn’t given, the policy was mis-sold.
Pressure selling techniques were often used to intimidate customers by playing on their fears of what might happen in the future. They were also be led to believe it was compulsory for them to take out PPI to get the loan they wanted or that taking it out would improve their chances of being accepted.
Some customers weren’t even sweet-talked into taking out a policy. The bank simply added it to their loan without even telling them and then charged them interest on the up-front premium for the length of the loan. PPI added up front to a £10,000 loan could add £4,000 to the overall cost. If it was taken as a single premium it would put the overall cost up to £16,000!
Exclusion clauses built into policies often made it impossible to make a PPI claim. Sales staff were supposed to make people aware of what those exclusions are:
- those in seasonal or part-time work (under 16 hours a week)
- employed on a temporary or contract basis
- aware of the possibility of redundancy in the future
- having a pre-existing medical conditions
- suffering from stress or backache
- under 18 or over 65
Many sales staff failed to establish whether or not the customer already had cover in place for their credit repayments or if their employer’s sick scheme would cover their payments without need for any insurance.
Policies have buffer periods of up to 90 days - so the customer must be out of work for three months before any payments are made. If it’s only a short-term absence, the policy is useless.
Reclaiming PPI has become the biggest single financial scandal in British history. The banks have already paid out more than £11.4 billion pounds on payment protection insurance claims and have earmarked another £7 billion to pay future successful claims.
The UK’s banking regulator is the Financial Conduct Authority who have become so concerned with the way the banks are investigating PPI claims that they have started a major inquiry into the high street banks to ensure they are following the regulations properly.
How do you know if you have a valid PPI claim?
There are a number of ways in which a policy could have been mis-sold:
- Did the seller ask you questions about your age, employment status or health?
- Were your earnings while off sick were guaranteed for six months or more?
- Were any of the exclusion clauses mentioned?
- Were you told that PPI was optional or did you feel pressured into taking the policy?
- Were alternative policies discussed?
- Were you advised of the cost of the premium as a separate item?
- Were you even aware that a policy had been sold to you?
How do I make a PPI claim?
PPI claims made through Gladstone Brookes have already recovered more than £362m for our clients. To reclaim the money that might be due to you, just fill out our PPI claim form or call us on 08000 149 014 and one of our friendly, knowledgeable staff will guide you through the process.