What to do if you are a victim of PPI misselling
Over the past two decades people have been missold insurance that was intended to make payments against loans, mortgages or credit cards if they lost their jobs or became ill. Payment Protection Insurance, or PPI, is not properly understood by most people, so it's often accepted by those who are already covered or those who would not be eligible to claim. So what should you do if you are a victim of PPI misselling?
PPI misselling is an increasing problem for the insurance industry. So much so that the Financial Services Authority (FSA) has investigated this form of insurance and challenged lenders who include PPI with their loans, credit cards or mortgages. There are four main causes of complaint:
- Loans with PPI can be as much as 20 percent higher than loans without it. In some cases, the loan has doubled in price due to the addition of PPI.
- PPI is structured to limit the chances of applicants being success when they make a claim.
- It is often sold to customers who didn’t realise it was part of the loan or to people who are unable to claim it, such as the self-employed.
- Making a claim is unnecessarily drawn out and complicated in an effort to limit the amount that is paid out.
All of the above complaints about PPI have helped the industry to generate incredible profits from it. An example of the profits PPI generates can be found in a study by The Guardian Newspaper which was published in 2004. The study showed that less than 15 percent of PPI money was paid back in claims that year.
How to deal with PPI misselling
So what should you do if you are the victim of PPI misselling? The FSA has done a lot of work for the consumer, so you don’t have to do anything. Regulations are now in place which makes all providers of PPI legally obliged to contact those they believe were missold this form of insurance. But this process could take a very long time, so consumers can contact their lender if they want to speed up the process.