Claims for mis-sold policies set to soar
- 23RD MAY 2007
With the very high profile investigation in to the payment protection insurance (PPI) sector by the Financial Services Authority (FSA) and the Office of Fair Trading, and its subsequent referral to the Competition Commission, the industry now faces another issue – claims for mis-sold policies.
Already the Financial Ombudsman Service (FOS) has agreed compensation claims for payment protection insurance customers who have been on the receiving end of unscrupulous sales practices, and it looks like there are a lot more to come.
So, what could constitute a miss-old policy? Industry expert Simon Burgess, who is also MD of standalone payment protection insurance provider British Insurance, says that one of the most common reasons why a policy is classed as mis-sold is where the individual consumer had been sold payment protection insurance without actually being aware of it.
He says: “The cost of the payment protection cover – which is often ludicrously expensive – is hidden among other costs. For example, someone who takes out a loan may not be aware that a percentage of their monthly repayment fee is actually for loan protection insurance.”
Similarly, credit card holders are often are paying for cover along side their monthly repayments, without actually being aware what the cover is for and believing that is it something compulsory.
Another point that Simon makes is that many people were sold payment protection insurance while not being made fully aware of the terms and conditions of the policy. This means that when they come to claim, they could actually be ineligible because of policy exclusions. Common illnesses, such as back complaints, are typically not covered under payment protection insurance policies.
Simon urges anyone who thinks that they have been mis-sold a policy to contact their lender to see if the matter can be satisfactorily resolved. “if not,” he says “then take the matter up with the Financial Ombudsman Service”.
