Banks to be hit with payment protection insurance claims
SUNDAY EXPRESS - 11TH MARCH 2007
Consumers are being urged to open a new front in the battle against Britain's banks by claiming refunds on rip-off payment protection insurance.
Seven million people a year take out payment protection insurance, which campaigners say has been widely mis-sold to those who do not want the cover or who would not be eligible to make a claim.
During recent months, thousands of consumers have successfully applied for refunds of excessive bank charges for misdemeanours such as breaching overdraft limits.
Campaigners think those mis-sold payment protection insurance could have the same success by reclaiming premiums plus compensation in some cases.
"Consumers are buying insurance that won't pay out if they need to make a claim and many have grounds for complaint,” said Simon Burgess from independent provider, British Insurance.
Payment protection insurance pays out if a policyholder falls ill or is unable to work and can no longer afford repayments on loans, mortgages and credit cards.
An Office of Fair Trading investigation exposed sales staff for telling borrowers the cover was mandatory, or including it in loan quotes without explaining that it was optional.
The OFT has referred the payment protection insurance market, dominated by big names such as Barclays, NatWest, Lloyds TSB, Halifax and HSBC, to the Competition Commission.
Burgess said: "Everyone should consider how they were sold their policies and read the small print to see if they're actually covered."
Banks charge premiums of up to GBP 25 a month to insure GBP 100 worth of monthly repayments - up to six times as expensive as the best value independent insurers.
Burgess said: "It's the year of reckoning for banks and building societies. Consumers can check if they have a case by asking themselves a series of questions, including, were you told the policy was optional or was it implied that payment protection insurance cover was compulsory? ; were you asked whether you had any insurance in place that already covered the risk?"
The no-win no-fee firm Conkers.co.uk, run by Brunel Franklin, offers to fight for those who think they were mis-sold a policy. Rival Oasis Financial Services helped a Mrs Styles recoup GBP 870 after she was sold payment protection insurance over the telephone along with a credit card application, despite her application showing she was unemployed.
However, Mike Naylor at Which? says people should be aware they can claim free without firms' help.
"Consumers who think they have a claim for payment protection insurance mis-selling can write to the loan issuer and state their case.
"If they get no joy then the Financial Ombudsman can take up their case. It's that simple."
