Payment Protection Insurance

Payment Protection Insurance Background

The purpose of Payment Protection Insurance, or PPI for short, is to protect the borrower if they become unable to pay back the monthly repayments on the loan. For example, if you become ill, or are made redundant and are unable to maintain your monthly repayments, the PPI is supposed to step in to keep the repayments going.

That is the theory... Unfortunately, there is a lot of money to be made on insurances and quite often they can be mis-sold. There is a huge amount of profit in insurance and many loops for the consumer to jump through to make a successful claim.

This means that there is a lot of money and profit to be made in the selling of Payment Protection Insurance. Lenders and agents can make huge commissions through selling policies to customers, so there can be special efforts made to sell PPI alongside loans and other credit agreements. But, these agreements do not always follow the rules they are supposed to!

It has been estimated that it could be possible that up to 2,000,000 UK consumers have been sold worthless or needless policies. Or the policies could be overly expensive, not fit for the purpose for which they have been sold or they have not been made aware of the commission the lender or broker is making on the sale.

Both the Financial Services Association and the Financial Omburdsman have made many rulings against lenders, resulting sometimes in hefty fines for the lender. There are a record number of complaints, many of whom will be entitiled to recover a substantial amount.

If you have taken out a loan in the past few years then it is worth while investigating whether you were sold PPI, or whether PPI was added. If it was, then there is a chance that you could be able to reclaim your premiums and there could be some reasonable amount of money coming back to you. Ask a couple of companies for some free help and advice and you could be thanking yourself in a short time.