Payment Protection Insurance makes headlines for all the wrong reasons
For many years payment protection insurance was sold extensively by banks, credit card companies and other lenders. The principle behind the insurance was simple; it was designed to protect a customer taking out a loan or credit from financial hardship if they could not keep up repayments as a result of sickness, accident or redundancy. Many customers viewed it as a valuable form of protection and up to twenty million policies were sold. In 2005; however, public feeling began to change after the Citizen Advice Bureau launched a ‘super complaint’ regarding the cover.
The complaint criticised the cover heavily claiming it was often expensive, provided poor value for money and had been widely mis-sold. As a result, in the following year, the Financial Services Authority and the Office of Fair Trading conducted their own investigations into the payment protection market. Their investigations confirmed many issues with the way the cover was being sold. Subsequent investigations by the Financial Services Authority into the activities of a number of lenders revealed further failings and, as a consequence, several faced large fines. Some of the issues uncovered included instances where policies had been added without the customer’s consent, policies sold without full explanations of the terms of the cover and a more general failure to put in place processes to protect customers from mis-sale.
The investigations attracted a great deal of media attention and public awareness of the issue of mis-sale rose significantly. As a result, since 2006, more than 1.5 million customers have submitted payment protection complaints to the Financial Services Authority with many receiving refunds.
In December 2010, the issue of mis-selling made headlines again when the British Banking Association requested a High Court Review of new Financial Service Authority guidelines regarding the sale of payment protection. The new guidelines aimed to protect customers from the threat of being sold an unsuitable policy, but the Banking Association was unhappy as they felt the new guidelines would force lenders to review old sales by new standards. In April 2011 the High Court returned its verdict finding in favour of the Financial Services Authority.
The Court’s decision was seen as a significant victory for the consumer and several banks have subsequently announced the allocation of funds to finally address the payment protection issue.
If you believe you may have been mis-sold a payment protection insurance policy, Belmont Thornton, the PPI claim company, may be able to help. To find out more about the issue of mis-selling and how they could assist you with making a claim, visit ppiclaimcompany.co.uk
Belmont Thornton Ltd. is a specialist Financial Claims Company regulated by the Ministry of Justice in respect of regulated claims management activities; thier registration is recorded on the website claimsregulation.gov.uk number 18273