PPI Refunds
In the UK, when people take out loans, one of the most common insurance product that is coupled with the loan is the PPI. PPI stands for payment protection insurance. It protects the holders debt repayments for a period of one year. The debt repayments that are covered are usually personal loans, credit cards, and mortgages. The coverage takes effect when the holder is unable to make debt repayments due to sickness, accident, death, and unemployment.
Many banks and insurance companies limit the debt repayment period to one year, because it is expected that the holder will have a new job within twelve months. Not all people are eligible to get PPI policies though. People who are self-employed, retired, or unemployed cannot be sold PPI. The same can be said for people who have longtime disabilities or sickness that prevent them from working or earning a regular income. However, many banks still managed to sell these people PPI, which is why there is a lot of holders requesting to refund their policies.
When they sold PPI, many banks failed to do a background check on whether the person taking out loans are eligible for PPI. Most people are found to have no requirement for such insurance policy. According to one studies made by consumer groups, the majority of PPI holders will not be able to claim on their policies. As a result, consumer groups organised themselves against and publicised the mis-selling of the PPI.
Online, consumer groups urged people who have taken out loans to check whether they also hold PPI policies. Many people are unaware that they have PPI policies, because they thought PPI was included in the loan they were paying for. In other cases, people reveal that they were told by the banks that PPI was a required policy before they are allowed to borrow money or take out mortgages and credit cards.
People who want to claim PPI refunds go to the FOS or Financial Ombudsman Service, the government body that tackles financial disputes between insurance companies, banks, and consumers. The job of the FOS is to mediate between banks and consumers, investigate allegations of fraud or misrepresentation, as well as tackle issues of mis-sold PPI claims.
However, since 2008, the FOS has experience unprecedented surges in the amount of PPI complaints being filed. In January 2011, the PPI complaints surged 68%, far more than what the FOS was prepared to resolve for January. The surge is expected to further slow down the processing of individual PPI claims.
Many people are going to claims companies for help claiming refunds. Claims companies provide legal assistance and financial expertise for people who have been mis-sold PPI. Claims companies do not usually charge upfront fees; they only take a share of your PPI refund, which will normally not exceed 25% plus tax. Many people are attracted to claims companies because they do not have to pay them anything for their services if the cases lose. For their part, claims companies need to win PPI refund cases in order to make profits.
If you want to refund your PPI, you have to find out first whether you are a policyholder. If you have taken out a loan in the past year, chances are you have also been sold PPI. You can also make a PPI claim if you have been told that PPI is compulsory, or if PPI was not clearly explained to you.