What is Mis-sold PPI?

Payment Protection Insurance (sometimes called loan protection or PPI) covers a loan or debt repayments in the event of certain problems – for example, if a borrower is unable to work because of illness, or if a borrower is made redundant. PPI policies were often sold as part of the deal when consumers obtained loans, mortgages or credit cards. Many of the lenders have mis sold Single Premium PPI policies.

For example lenders have:

  • Added PPI cover WITHOUT telling the borrower
  • Told borrowers the insurance was compulsory
  • Suggested that obtaining PPI would better your chance of getting loans
  • Added the cover for borrowers who would not be allowed to claim, for example the self employed
  • Not checked to see if the borrower already had cover through work

The greatest instance of mis selling is associated with Single Premium PPI policies where the PPI premiums are calculated and added to the main loan. The insurance policy now forms part of the loan and clients end up paying interest on the PPI premium at the same rate as the main loan from the outset of their loan term.

The Financial Services Authority (FSA) has announced a package of tough measures to protect consumers in the Payment Protection Insurance market and ensure they are better treated when buying PPI or complaining about it. This also resulted in the FSA taking action against 22 firms over poor PPI sales practices. This includes the FSA’s largest fine in the retail sector on Alliance & Leicester which was fined £7m in October 2008 for serious failings in its telephone PPI sales.

Up to £9 billion in Mis-sold PPI to be Claimed by 2 million borrowers

Throughout the history of the PPI mis-selling scandal the Banks and other lenders have sought to avoid their obligations. In October 20101 the British Bankers Association launched a Judicial Review designed to avoid paying out for their PPI mis-selling, fortunately they lost this legal action In April 2011 and now Claim Hero is fighting the Banks to get victims of mis-selling refunds.

It is estimated by the Sunday Times (16th June 2011) that the big Banks have put up to £9 billion to one side to pay the estimated 2 million victims of PPI miss-selling. Lloyds TSB alone has allocated £3.4 billion towards the cost of compensating their customers.

Make sure you get your entitlements – get Claim Hero on your case by completing the Quick Payment Protection Insurance Test or sending us your details in the form. [arrow pointing to it?]