The mis-selling debacle
- 4TH MAY 2007
With around 28 million payment protection insurance (PPI) policies in force, there are a lot of people making a lot of money somewhere. In fact, the industry – which provides a tax-free monthly lump sum should you become unable to work due to accident, prolonged sickness or unemployment – is worth around £6 billion a year, of which £5bn of this is pure profit.
The industry has been name-called, including “scam” and “rip-off”, and quite right so. While it is a fantastic policy to have, giving you financial stability in the event of the unforeseen, its reputation has been tarnished as a result of the work of unscrupulous lenders and high street banks who massively over charge for the profit and often coerce their customers in to buying this cover – even if they would not be eligible to claim.
However, following the referral of the sector to the Competition Commission, which has highlighted just how some consumers have indeed been ripped-off, the Financial Ombudsman Service has seen and has already settled some compensation claims.
It is anticipated that the compensation claims could run in to billions of pounds, over shadowing the endowment scandal of the late 1990’s.
Consumer champion and MD of independent payment protection insurance provider British Insurance, Simon Burgess says: “If everyone caught in the payment protection insurance trap got the compensation to which they might be entitled, we anticipate that compensation payments could reach £10 billion. This will dwarf the huge sums already paid out to holders of failing endowments.”
Anyone who thinks that they have been mis-sold a payment protection insurance policy is advised to first of all discuss the matter with their lender. If they are not happy with the outcome, then they should get in touch with the Financial Ombudsman Service (FOS), ensuring they have much documentation and notes of any conversations with their provider etc as possible.
