FAQ: Payment Protection Insurance FAQ's
Will Claiming Payment Protection Insurance Compensation Affect My Credit Rating?
Credit ratings are highly important in today’s world, helping individuals to attain financial products and loans when they need them. Any change to these ratings is therefore taken very seriously and the vast majority of borrowers will make sure they protect this at all times.
Many people worry over what may affect their credit rating and one question which is routinely asked is whether a PPI claim will have a negative impact on their rating or not.
PPI claims have become increasingly common over recent years, after the issue first began to gather momentum following an investigation by the Financial Services Authority (FSA) in 2006.
This investigation revealed that a number of consumers had been wrongly charged for PPI when they obtained financial products. Some of these individuals had the policy added without their knowledge whilst others were misled over what it covered and whether they were entitled to it.
In some cases, borrowers were told payment protection insurance had to be taken with any form of credit – something which is not true.
As payment protection insurance was offered on financial loan products, such as cash loans, credit cards and mortgages the situation concerning mis-sold policies is widespread. Due to the financial nature of the products affected, many people feel that making a claim could affect their credit rating and future dealings with lenders.
This is not the case. The PPI claim procedure is handled without any prejudice or bias and your credit rating is protected.
Anyone who has been deterred from making a claim due to this concern should therefore investigate their right to a claim.
As this will be done without any form of bias, future dealings will not be affected and your credit rating will remain untouched. There is therefore no reason why potential claimants should be deterred from taking action against mis-sold PPI, with concerns over credit ratings being impacted being completely unfounded.
To help understand why this will not be affected, it may be worthwhile for customers to consider certain systems which are currently enforced by the FSA.
In addition to the Banking Code, which outlines how banks are able to perform, the FSA launched the Banking Conduct Regime. This regime covered non-lending aspects of banking operations as well as regulating activity connected to accepting deposits and other banking actions.
One of the main focuses of this regime was on customer treatment, with the FSA also launching the “treating customers fairly” initiative. It is the work of these systems that ensures banks treat all of their customers in a fair and just manner, thus preventing any adverse effects being experienced when making a claim.
The intention of these initiatives and regimes is to ensure that all customers are treated in the same manner by their banks or lenders, creating an even playing field for customers.
This means that PPI claims will not have any impact on future dealings and will therefore not harm your credit rating either.