Payment Protection Insurance (PPI), regardless of the recent bad publicity, is actually a very good idea in principle and may be an ideal product for many borrowers who need it. People who take out a loan or any other type of credit agreement may become ill or lose their jobs during the term of the loan, and these people would then be covered by PPI. But many other borrowers may have been mis-sold PPI because they were not informed at the time that they took out their loan that it was not mandatory, or even that they may not have been eligible for protection.
The person who sold them the loan was on commission, therefore they would have wanted to sell them as much of their products as they could at the time they took out the loan agreement. By telling them that “of course, we’ll add in the PPI,” or something similar, they may have been led to believe that this was mandatory. However, since the PPI mis-selling scandal was exposed in 2008, and the Competition Commission’s new rulings came into force this year, thousands of people have realised that they were mis-sold PPI cover.
There are some major ways in which PPI was mis-sold in the last ten years. The most common method of mis-selling was by salespeople neglecting, or wilfully avoiding telling customers that PPI would be added to their monthly payments. Anyone who was sold a single-premium policy would have suffered even more, because they would not only be paying for the cover in the first place, but paying interest on it as well. No wonder so many people were outraged when the scale of this misspelling was disclosed.
It has now appeared that PPI compensation is due not only to people who were mis-sold the cover on a loan or mortgage, but also on other financial products, such as hire purchase, credit cards, store cards or even for nursing home fees.
One of the most galling aspects of the business is when people who took out PPI and knew exactly what it was find in the end that the policy does not cover them when they need to claim on it, and are not entitled to a payout. It is most satisfying of all for these people when they find that they can reclaim PPI. Remember, it is not just the cost of the payments on the policy that can be reclaimed, but the interest that could have been earned with that money.
Many of us are confused or baffled by financial arrangements, and it is precisely this that the salespeople who are responsible used to their advantage when they mis-sold PPI. Now that so many people realise that they are entitled to PPI compensation it is to be hoped that this kind of mis-selling has finally been stopped.