Loan PPI
Payment Protection Insurance is a financial product which is offered to consumers, and which is intended to cover repayments on loans and other credit products which the consumer has in the event that he loses his source of income. PPI is usually attached to a particular credit product and PPI on personal loans is one of the most widely mis-sold form of Payment Protection Insurance.
The law now prohibits financial services providers from selling payment protection insurance at the same time as a loan or other credit products. However, before this change in the law, PPI was widely marketed by loan companies at the point of sale in an extremely aggressive manner. Consumers were often misled by salespeople telling them that their loan application would not be approved if they did not take out PPI cover, or wrongly advising them that the policy was suitable for their circumstances when it was not.
“Front Loaded” PPI on loans
Previously, instead of selling PPI policies under which the consumer pays a monthly fee for PPI cover, many loan providers would sell a type of PPI policy known as a “single payment PPI policy” or a “front loaded PPI policy”. This involved calculating one large premium, often thousands of pounds, which was to be paid in advance for the policy, and adding this to the total loan amount. This was often extremely bad value for the consumer because the PPI element of the loan accrued interest which was added to the outstanding debt and, over the lifetime of the loan, the consumer might pay double or even triple the original PPI premium in additional interest. Because of this, salespeople would often try to persuade consumers to take out these types of policy even if they were completely unsuitable.
If you have ever had a loan of any type, either from a bank or building society or as part of a care finance package, you may have a PPI claim. Even if you do not think that you were sold PPI, you should still investigate further because tens of thousands of people have had PPI added to their loans by commission-hungry salespeople without their knowledge.
Credit Card PPI
People often make the mistake of thinking that if they do not have a mortgage or any large loans, they will not have Payment Protection Insurance and so cannot make a claim. However, this is not necessarily true as many people pay a monthly premium for PPI which is attached to their credit cards without even knowing it.
This is because Payment Protection Insurance is often sold alongside the credit product which it is meant to cover. In the case of credit card PPI, it was not uncommon for the PPI sale agreement to be little more than a box on the credit card application which the consumer was asked to tick if he wanted to “protect” his credit card.
Credit card Payment Protection Insurance is meant to cover the payments on the credit card debt in the event that the cardholder becomes ill, suffers an accident or loses his job, and so cannot work. However, many agreements only cover the minimum repayment each month, rather than the full credit balance, and consumers are often not aware of this when they purchase the policy, nor are they told that they could probably buy much cheaper Payment Protection Insurance elsewhere. In these circumstances, cardholders may have a valid mis-selling claim.
Whilst the monthly premiums for credit card PPI are much lower than those which are paid on other types of debt, a consumer who is paying for PPI on several credit cards can potentially have claims for a substantial amount of money. For example, someone who has had three credit cards for the past 4 years and who is paying £15 per month on each of these will have claims totalling £2,160.
Mortgage PPI
Payment Protection Insurance, or PPI, is supposed to cover your debt repayments if you become ill, have an accident or are made redundant. It is a controversial product because growing numbers of people are successfully claiming compensation on the grounds that their PPI was mis-sold to them. Many people associate Payment Protection Insurance with personal loans and hire purchase agreements, but don’t realise that Payment Protection Insurance can also relate to other types of credit product, including mortgages.
Although in recent years the selling of Payment Protection Insurance has come under increasing scrutiny and rules have been significantly tightened, prior to this many mortgage companies were making use of sales tactics and practices which were unfair and wholly unconscionable. This often included telling consumers that their loan would not be approved if they did not take out a PPI policy to cover repayments then and there, or leading consumers to believe that the PPI policy offered by the mortgage provider was suitable for their circumstances and would fully cover their mortgage repayments in all cases.
However, in the vast majority of cases these PPI policies are completely unsuitable for the consumer. Harsh restrictions written into the terms of the policy mean that consumers will not be able to make a claim unless they were in full time permanent work at the time they purchased the policy, and have never suffered from any illness or medical condition, including stress related absences from work or back ache. Often consumers were not told of these onerous requirements at the time they purchased the PPI cover, and so are unaware that their PPI policy is useless until they try to claim the benefit of it.
If you have been sold a Payment Protection Insurance policy alongside your mortgage then you should make a claim as soon as possible. If the policy was unsuitable for you, or was mis-sold for some other reason, then we may be able to win you a refund of all of the PPI premiums which you have paid, plus interest.