Over the last three years the subject of Payment Protection Insurance has been making headline news. Finally after much debate and claims of gross profiteering, new changes in the law have been finalised which go a long way to protecting the consumer.
It is good news for the estimated 2.75 million people mis sold a product they could never use, but not for the financial industry which unfairly siphoned off some £300 million of the public’s money per year according to The Office of Fair Trading.
They are now having to refund an average of £2500 per claim thanks to claims management firms such as The Claims Guys who have recovered £13million for clients caught up in the swindle.
The dreaded PPI’s were loan insurance premiums added to financial agreements on such things as credit and store card charges, car finance or personal loans. These were meant to kick in should someone lose their job or suffer from a serious illness that prevented them from making their monthly payments.
But, in a high proportion of cases it didn’t. Clauses slotted into the terms and conditions, which were often never explained to customers, prevented anyone self-employed, retired, suffering from illness or with a medical condition such as a bad back, from ever claiming on the expensive insurance.
The public felt cheated and it was, to the tune of an estimated £30 billion over the last decade alone.
In 2006 following a series of complaints, most notably by The Citizens Advice Bureau regarding the dubious nature of PPI protection cover, the OFT referred the banks and other financial organisations to the Competition Commission over Payment Protection mis selling with Chief Executive John Fingleton stating,
“It is clear that many consumers are failed by PPI which gives them a poor deal and often less protection than they think”.
A two year investigation ensued and the Competition Commission’s findings agreed and PPI cover was banned at point of sale when taking out a loan or financial product.
The Financial Services Authority (FSA) has applied the new legislation to reform PPI practices and all companies selling the cover must fully abide by them by 1st December 2010.
The new ruling in snapshot:
• Payment Protection Insurance or PPI is no longer permitted to be sold directly alongside credit cards and personal loans
• Any bank or store offering a loan or credit have to let a minimum of 7 days to pass before selling PPI to the consumer
• Single premium PPI (the insurance cost which is put together with the loan debt so customers have to pay interest on both amounts) is banned
• All exclusions to the insurance must be fully explained to customers prior to them purchasing PPI cover and must be wholly declared in advance
While this new ruling has been welcomed by many organisations, millions of British people are still chasing mis sold PPI claims from the past decade which saw both Barclays and Ocean Finance as the biggest culprits as well as most High Street banks.
It seems the future of the financial industry has become much more transparent with the public finally seeing evidence that someone is listening. Once the old claims totalling have been settled then consumer confidence can return to a very fragile market.
This has been brought to you by The Claim Guys – the honest claims management company who are members of the Claims Standard Council.
Did you know that a £7,500 loan over 5 years could have increased by up to £3000 due to the added PPI premiums?
If you need help to make a claim for mis sold PPI contact The Claims Guys at http://www.theclaimsguys.co.uk/
