Payment protection insurance (PPI) has been a recurrent topic on the news during the past few years. What has been called the “payment protection insurance sham” is now thought to be one of the worst scandals in the history of the British banking and financial services, given its magnitude and the impact that it has had and continues to have on consumers.
Once the scandal was uncovered, the financial authorities and regulatory bodies saw a massive surge in the number of payment protection insurance claims. In fact, only during 2011, the Financial Ombudsman Service had to deal with more than 264,000 new claim cases. Although this means that some consumers who want to file a PPI claim will experience long delays in having their case reviewed, it is important to understand how PPI insurance works and what the best ways of approaching a PPI claim are.
Payment protection insurance is a type of insurance cover that ensures loan or credit card repayments even in cases where the borrower becomes ill, unemployed, or otherwise unable to meet his financial obligations. Although individual PPI claims may vary, payment protection insurance typically covers debt repayments during a period of up to 12 months.
This type of insurance is sold by the same financial institutions that offer loans, mortgages, and credit cards, and its costs can range between 16 and 25 per cent of the amount borrowed. This means that a consumer who borrowed £7,500 could end up having to repay up to £10,500 once interest and PPI costs are added.
The PPI scandal came about as financial institutions mis-sold PPI to customers, making them believe that this type of insurance was compulsory or even a pre-requisite to having their loan approved. The truth is that PPI is neither compulsory nor necessary in all cases, so this type of insurance cover has become extensively over-sold and over-priced. Now there simply is no excuse not to get back what is yours!
Consumers who have been mis-sold payment protection insurance can now file a claim to get their money back and other forms of compensation. Although it is possible to claim individually, it is advisable to do so through a professional claims handler, given the complexity of these claims and the amount of paperwork involved. This is particularly true in the case of consumers whose PPI policies date from before 2005 or in cases where the account in question has already been closed.
Once you have found a reputable company that knows how to claim PPI, you can make a claim quickly and efficiently. Pick a company that ensures that consumers will exclusively deal with professional and experienced claim handlers who provide their services with no upfront costs and on a no-win-no-fee basis.