Payment protection insurance can be a very useful financial product. It is designed to cover you for repayments to loans, plastic cards and other credit products should you be unable to pay due to ill health or redundancy. However lenders have been misusing PPI insurance for a number of years now and this has left consumers out of pocket by thousands of pounds.
There are many ways that lenders mis sell PPI to their clients. One of the biggest ways is the “single premium” policy. This is where the cost of the policy is added to the loan then sold as “fully protected”. The customer then takes out a loan not knowing they are making interest repayments on the PPI policy as well as the loan.
This can add a significant amount to the money owed, which many people will struggle to pay back. Some lenders have even gone as far as to tell customers they cannot take out a credit product unless they have the PPI cover as well. This is actually against financial regulations as PPI is classed as an optional insurance and no one ‘has’ to have it.
If you have a job or are retired and not suffering any long term illness, PPI may not be of any use to you. Should any of these situations arise, there are usually so many exclusion clauses (self employed, bad backs to name a few) that only 18% of policies ever pay out.
The terms of this cover do not provide for pre-existing illnesses in most cases. This makes the policy worthless to people with pre-existing conditions as when they try to claim they will be refused. This systematic mis selling of PPI is one of the biggest scams in the banking industry and has destroyed a lot of the faith many people had in the whole financial system.
Now the extent of mis sold PPIs has come to light lenders are under serious pressure to refund customers their money. If you were told you had to have PPI or were mis sold the policy for a number of other reasons then you could claim back your money. If you don’t know where to start then you could take advantage of one of the specialist PPI claim handling companies. They have a lot of experience dealing with lenders and filing complaints with the relevant authorities. This can be a very useful service especially if you are a very busy person or your case if very complicated.