How Payment Protection Insurance Has Been Mis Sold
PPI, or Payment Protection Insurance, may have been mis-sold to you when you signed that sheaf of documents your Personal Banking Associate slid across her laminated, Plexiglas-topped desk when you thought all you were doing was securing overdraft protection or a line of credit or a car loan or a mortgage. It is also likely that you agreed to pay for a similar product when you signed beneath the fine print in your contract with your credit card company. But you do not have to bend over and take it any more.
The credit card insurance product goes by a couple of names; CPI or IP. There is a line for it or something similar in your monthly bill. CPI means Credit Protection Insurance. IP means Insurance means Income Protection. PPI is also mis-sold under the aliases RI, Repayment Protection, and CPI, Credit Protection Insurance. The basic pitch is that these products will make your payments for you for a year or so if you lose your job, get sick, are injured or die.
With some variance according to the policies of the insuring entity, Payment Protection Insurance makes the payments on the debt for a limited time, most often set at a maximum of 12 months, in the event you become unable to make the payments yourself due to circumstance beyond your control such as illness, injury, death or losing your job.
The controversy over the mis-selling of Payment Protection Insurance and Credit Protection Insurance originates from a finding that the claim rejection rate for the product is substantially higher than for other kinds of insurance products. Investigations into complaints made to the Financial Service Authority in the United State have determined that the buyers of the coverage are being mis-sold the product in many cases.
The reasons behind the mis-selling of the product are a combination of a vulnerable clientele and commissions that are frequently worth more than the interest the lender receives from the servicing of the actual debt.
Other underhanded mis-selling tactics found to be in widespread use include telling the consumer that the protection is mandatory or threatening to refuse to make the loan if Payment Protect Insurance is not purchased.
Various deceptive practices were discovered to be in use. The most egregious is telling loan customers that purchasing payment protection insurance is mandatory if they want the loan.
The exploitation of people who are already in need of a loan by deceiving them into paying for an insurance product that may not be right for them in many circumstances resulted in a number of financial services firms being fined by the regulatory body.
Even in cases where the product was not flagrantly misrepresented, the agency found that payment protection insurance and so called credit insurance were not being explained in sufficient detail for consumers to be able to make informed buying decisions.
None of this would be of much importance if the protection were not so expensive. While costs can vary significantly, it is not uncommon for the rate to constitute a quarter of the amount of the maximum pay out limit. If you are loan shopping, inform yourself in detail of the details of any payment protection insurance product your lender insists you take.
Want to find out more about making PPI claims? Then visit www.BankCharges.com and find out how to start your mis sold PPI claim today.
Tags: economy, mis-sold ppi, Personal Finance, ppi claim, ppi claims, ppi compensation, recession
