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The problem with payment protection insurance

PPI insurance has been banned from sale alongside loans. Customers wishing to take out Payment Protection Insurance can decide to buy a regular premium PPI instead. This is due to the fact that so many payment protection plans were wrongly sold over the past several years. A large number of PPI claims referred to the Financial Ombudsman Service are upheld. This goes to show that payment protection insurance has been incorrectly sold over a number of years and provides consumers with hope that they will eventually receive compensation. Claims against lenders have been rising significantly. The FOS has alread informed us that it is dealing with a record number of PPI complaints.

So it begs the question – why are so many people complaining about PPI?

One of the most common complaints about PPI is that the lender forced the decision to take out PPI on the borrower. That is to say, the lender would indicate in some way that the loan application would only be successful if the insurance policy was taken out. Some consumers have indicated that financial institutions went a step further by coercing them to take out payment protection insurance.

It is not in the interests of each and every person to take out PPI insurance. Those with a pre-existing medical condition, for example, may not be able to claim on the policy if the condition reoccurs and they are unable to work. Other medical conditions are also not covered, for example back related problems and stress. This type of insurance can also be unsuitable for anyone who is out of work. This is because self employed people can only claim if their business is wound up.

Adding PPI to a loan makes it very expensive. This is because single premium PPI attracts interest in the same way as the loan. Certain aspects of the policy should be discussed with the customer before the policy is sold to them. To make a successful complaint, customers need to find as much information about the policy as they are able to.

It is also helpful to have a copy of the credit agreement. It is a lot more simple to make a complaint if you have the relevant facts to hand. Some claims are unsuccesful. Some complaints are denied by the loan provider. Now the customer needs to comprehend why the complaint was rejected and what options are available to them. The Financial Ombudsman Service has stated that half of all consumers give up when the complaint is initially rejected. Some customers do not understand how to proceed to the next stage.

Lots of resources are availale on the Internet to help people with pursuing their claim further. To give an example, there are a number of articles about PPI on the Internet. Those who do not have the time and inclination to deal with the complaint on their own can contact a claims management company. Claims companies are able to deal with PPI claims usually on a success fee basis. The good thing about this is that the customer can forget about dealing with the whole process. They can leave the legal stuff to a professional to deal with while they get on with other important things.

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