FAQ: Payment Protection Insurance FAQ's
Mis-sold Loan Payment Protection Insurance
Since the initial complaint was lodged in 2006 by the Citizen’s Advice Bureau, loans and other financial products sold over the past ten years have come under heavy scrutiny.
The banking industry in particular has been heavily affected by the PPI mis-selling scandal and the industry as a whole now owes billions in compensation. Why? – Because PPI was added to thousands of loan applications and agreements incorrectly.
This meant a number of borrowers were mis-sold the insurance, leading them to pay money for a product which they would have been unable to use or were unaware they were purchasing.
Mis-sold PPI timeline
Mis-sold PPI has become such a common thing over recent years that it can be difficult to understand where it all began.
Since 2006 a great number of claims have been lodged by individuals who took out loans and other products, only finding out years later that PPI had been wrongly added.
To help you understand the situation, here is a brief timeline for mis-sold PPI cases:
2006: The Citizen’s Advice Bureau lodges the initial complaint. The Office of Fair Trading (OFT) and Financial Services Authority (FSA) then conduct an investigation into the situation.
2010: The Financial Ombudsman Service (FOS) claims to have received 50,000 cases for mis-sold PPI.
2011: High Court case begins in January with a ruling against the banks made in April.
2011: Over £1 billion is said to have been repaid in claims between January and October. Some agencies report a significant rise in the number of complaints they received in the last three months of the year.
2012: The FOS reveals they expect to receive 285,000 new cases across the year.
Loans and mis-sold PPI
Since the mis-selling issue came to light, a vast number of complaints have been lodged by customers and many of these would have been from loan policies.
Consumers can take a large number of loans throughout the year, covering everything from mortgage repayments to car finance and other expenses.
The versatility of these products mean that many individuals have become dependent on them as a way to cope with their personal finances – and this is a trend which is still true today.
Recent figures reveal that approximately 15% of the population have turned to loans, credit cards and unauthorised overdrafts just to cope with everyday bills, demonstrating how borrowing money has become something of a habit.
Whilst loans and other products are not necessarily a bad option for consumers, it is important that individuals exercise vigilance and caution when entering into these agreements.
PPI is a viable product for eligible candidates, providing insurance on the payments should the borrower become unemployed or have to stop working due to illness.
However, with this insurance having been wrongly sold on a number of loans, it is also vital that people check their previous agreements to assess their situation.
Anyone who feels they have been mis-sold PPI in the past may benefit from obtaining professional advice from a company like iSmart, giving them support when reclaiming their lost money.