Don't Waste Thousands On Worthless PPIPosted on: 19 October 2009 by Mark O'haire
The Financial Services Authority is continuing its crack down on lenders who mis-sell payment protection insurance with tough new measures to be introduced by year end.
The Financial Services Authority (FSA) is continuing its crack down on lenders who mis-sell payment protection insurance (PPI) with tough new measures to be introduced by year end.
The new guidance will ensure complainants are handled fairly and redressed where appropriate.
These measures build on the agreement the FSA obtained from the industry earlier in 2009 to stop financial institutions from selling single-premium PPI policies alongside loans.
With such policies, lenders would load the total cost of the PPI onto the loan applied for, forcing the borrower to pay interest on the insurance premium as well as the loan.
This practice also meant that many consumers were unaware they were even had PPI never mind that they were paying for it in this way.
If you've taken out a loan, credit card or mortgage in the last six years, it's vital you find out if PPI insurance was included by your lender as part of the transaction.
What Is PPI?
PPI is a form of insurance designed to cover your credit card, mortgage or loan repayments in the event of accident, sickness or unemployment.
However, PPI policies are often expensive and can come with a long list of exclusions.
For example, if you are retired, self employed or have an existing medical condition, you are unlikely to be covered.
It's therefore vital you read the terms and conditions carefully before you sign on the dotted line. Also, make sure you shop around for an affordable deal rather than accepting the first deal your bank offers you.
Remember, PPI is not compulsory. If you already have another form of insurance in place, such as critical illness cover or income protection insurance, you may have no need for PPI.
Be aware that if you don't have any protection insurance in place and something unexpected does happen to you, defaulting on debt repayments can have very serious consequences.
Therefore, you should think carefully about putting some form of safety net in place to avoid a financial catastrophe later down the line.
Have You Been Mis-Sold PPI?
Lenders have a responsibility to make sure you fully understand the nature of any policy you purchase.
However, because PPI policies are extremely profitable, some companies have failed to fulfil this duty.
If you have a PPI policy that is inappropriate for you and you were not given the full information on what the insurance would cover when you purchased it, you may well be in the position to claim compensation.
Here are three common examples of where PPI has been mis-sold.
- You were told PPI is compulsory. It must be made clear by the salesperson that PPI is optional and does not have to be purchased through their company.
- You were retired, self employed or unemployed. As the employment element of PPI is only appropriate for people who were working at the time they took out the policy, you should be asked for your employment status before you apply.
- You had a pre-existing medical condition. You should be informed when applying for a policy if your medical history could impact your ability to claim in the future.
If you are unsure whether you have been mis-sold a PPI policy, it's a good idea to check out the FCA website for more information.
Top Tips For Reclaiming
If you think you have grounds for a complaint, you should first write a letter to the firm you purchased it from and explain that you think your policy was mis-sold.
If you are unhappy with the outcome, you may then take your complaint to the Financial Ombudsman Service (FOS).
The FOS is the official independent service for settling disputes between financial companies and their customers. It is free to use and there is no penalty if you lose the case.
To make your complaint, simply contact the Ombudsman through the FOS website, fill in a complaint form and enclose the necessary paperwork to back up your case.
Finally, think twice before using a 'claims specialist' to handle your complaint. There is no evidence these firms can do anything you can't do yourself for free. Read more about this here.
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