Many consumers were mis-sold PPI (Payment Protection Insurance) with credit finance such as loans, credit cards and mortgages. PPI was usually added to a customer’s application by finance providers, in some cases without their knowledge. Some providers even rejected a credit application if PPI was refused by the customer.
PPI can be a useful policy, as it protects borrowers if they are unable to work due to illness or injury and can’t meet their finance obligations. However, for many borrowers the policy was mis-sold to them by the retailer.
There are many examples of PPI mis-selling in the credit finance sector, where some customers were not made aware by finance providers that PPI was attached to their policy. In instances where the customer was made aware that PPI had been added, they were not informed it was optional.
There is a new type of complaint reason in relation to PPI, which now needs to be considered due to a 2014 court case (often referred to as ‘Plevin’). This court case ruled that, as over 50% of the cost of the PPI being sold to the consumer was taken as commission by the lender and they were not informed of this, it created an ‘unfair relationship’. Therefore, the FCA have now produced further guidance in relation to PPI complaints, stating that any undisclosed commission paid over the 50% ‘tipping point’ should be refunded to the consumer, along with interest, if this was not disclosed to them.
Around 10 million people in the UK were sold PPI with a credit card between 1988 and 2011. The Payment Protection Insurance should have helped ensure card payments were met if you couldn’t work due to sickness, an accident or being unemployed.
Banks & lenders sold PPI alongside loans to more than 20 million people during the last few decades, earning billions of pounds in profit. However, lots of PPI was mis-sold. It was easily done compared to credit cards & and other products, due to loan size and term.
PPI on Mortgages
Over the last couple of decades, lenders have sold mortgage payment protection insurance (MPPI) to a large number of people. The policy would safeguard your mortgage repayments if you became unemployed, or were out of work due to an accident or sickness. However, MPPI was mis-sold to many without their knowledge.