What is PPI – payment protection insurance?

By September 5, 2018 No Comments

PPI stand for Payment Protection Insurance and it is an insurance policy that was usually attached to credit agreements such as loans, mortgages or credit cards and even overdrafts.

The idea of the PPI policy was to cover payments of loan or credit card when a policyholder was ill, had an accident or lost their job and was not able to keep up with payments due to the lack of income.

The product should protect customers, but many people were unaware they had been sold the policies or they weren’t covered by PPI they paid because they have not met conditions of the policy. The common example is a PPI policy that covered employed people, sold to person who was self-employed.

What is mis-sold PPI?

Many people were sold PPI without their knowledge and many were misinformed about the policy. For example banks informed clients that PPI policy was compulsory in order to get a loan. The Financial Conduct Authority prepared a full list of signs that you had a PPI mis-sold:

  • Were you pressured into buying PPI?
  • Were you told you must have PPI?
  • Were you advised to take out PPI that did not suit your circumstances?
  • Were you promised a cheaper rate or a better chance of acceptance of the loan or credit, if you took PPI?
  • Was PPI added without telling you? Some agreements added PPI automatically with pre-ticked boxes so you had to opt out, not in
  • Were you self-employed, unemployed or retired but advised to take PPI?
  • Did you have a pre-existing medical condition?
  • Were you advised if this condition was (or was not) included in your PPI?
  • Was it not made clear that you would pay interest on the PPI if it was added to your loan?
  • Was not it made clear that the PPI cover would end before the loan or credit was repaid?
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What if PPI was not mis-sold?

Even if you think your PPI policy was not mis-sold, you still can claim some money back, as simply having had PPI means you were likely mis-sold. The FCA decided that banks must also consider claims based on a breach of rules regarding fairness of relationship between lender and borrower. To complain about an unfair relationship between lender and borrower the commission for the sale of the product must be  above 50%. Typical commission for PPI sales was 67%. New grounds to make a complaint about a PPI policy are based on the Plevin case. The Plevin case suggests almost anyone who has simply had a PPI policy was likely mis-sold, and could be due money back.

How far could I claim PPI refund?

As long as the PPI was active within the past six years (or is still active), then it is possible to make a claim. If the policy was older, the chances of success are lower, but it is worth trying.

Other names of PPI

Payment Protection Insurance is not always marked as PPI in loand or credit card agreement. The other names could be accident, sickness and unemployment (ASU) insurance, account cover, card protection, card protector, credit card repayment protection, credit insurance, credit protection, income protection, loan care, loan insurance or loan repayment insurance, loan protection, mortgage payment protection insurance (MPPI), payment cover, personal loan protection, protection plan, redundancy cover.

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