The mis-selling of Payment Protection Insurance (PPI) caused disaster in the United Kingdom in the past, when over one hundred thousand claims were dealt with by the Financial Ombudsman.
As banks reserve large amounts of cash to settle existing PPI claims, many people have not yet claimed compensation for PPI that was mis-sold with applications for online loans, credit cards, and other forms of finance.
About one in three PPI claims is settled in the favour of the claimant, who gets compensated an average of £2,750. Figuring out why the mis-sold PPI became so important in the United Kingdom requires an understanding of the trends from years before. Customers were very unhappy with the interest rates that banks were charging for basic forms of credit, like online loans and overdrafts, especially when it became evident that they had been mis-sold PPI.
The question that should have been asked at this point is how can a borrower tell when they have been mis-sold PPI? People should understand what exactly does mis-selling mean and why should they be refunded? PPI can be mis-sold in a number of ways. If PPI was included with a credit card or loan as an extra, the lender could have mis-sold the insurance if they did not make it clear to the person applying that the PPI was optional.
Lenders are required to discuss any and all of the aspects of PPI that could affect customers. Applicants need to be made aware of payment terms, repayment schedule and the interest rate. Some PPI policies can include certain clauses that may seem unfair to the interests of the applicant. Unemployment cover for unemployed people or the retired might also substantiate a PPI claim. People that are self-employed should be made aware of any other terms and conditions that could apply to them.
The lender is required by law to discuss all the aspects of the PPI policy. Borrowers that have online loans tend to have more problems when making a PPI claim. As we know, most people do not read the fine print in a contract, especially when they are applying for credit, and lenders try to trick applicants.
Lenders stopped doing this after July 2007, which make it more difficult for borrowers to accuse them of mis-selling PPI. Lenders expected that online applicants would read the terms of PPI agreements before applying. It is very important that people in receipt of online loans before July 2007 check whether they may have been mis-sold PPI.
Everyone that has borrowed should check their policies thoroughly to see if they were mis-sold PPI by lenders. Forcing people to pay inflated premiums and useless indemnities is an unacceptable practice, but borrowers cannot wait for PPI to be paid back. They will need to work through each step of the claims process before they can receive their money.