Payment Protection Insurance – is this the biggest "Bank Robbery" in history? WEALTH WARNING – LOAN & CREDIT CARD SCANDAL: ADVERTISEMENT FEATURE

0 Comments | Evening Gazette (Middlesbrough, England), Oct 5, 2009

Payment Protection Insurance (PPI) policies are designed to cover the cost of loan or credit card repayments in the event that the customer is off sick from work or has b e c o m e unemployed. However, Renaissance Easy Claim, a leading financial complaints company, is warning that many people were sold policies they didn’t want or need and so could be due compensation.

Andy Humphries, Managing Director of Renaissance explains, “The main problems with PPI are that many people don’t really need the policy they have; the numerous exclusions on the policy mean they may not be able to claim at all; and that the benefit is restricted to a set period of time -usually 12 months. Many customers did not even know they were being sold the policy, or thought they had to have it to get the loan or credit card.

“In 2005 the Citizens Advice Bureau (CAB) estimated there were 20 million policies with around 7 million new policies being sold each year. That means, on average, each household in the country has one of these policies.

“In their report, the CAB identified what they said to be widespread mis-selling and consumers paying over the odds for the policies, with only 15% – 20% ever making a claim under the policy. Little wonder they called their report ‘Protection Racket’!

“It’s been estimated that about 60% of PPI policies were related to personal loans and most were sold by the high street banks and building societies. A typical premium, for a 5 year loan of pounds 10,000, was over pounds 2,000. As this was normally charged as a single premium and added to the loan, the banks would charge interest on it as well. That could take the total cost to pounds 2,500 or m o r e . Even if someone was unfortunate enough to need to make a claim because they lost their job, but fortunate enough t o e s c a p e t h e exclusions on the policy, then the cover would typically only cover the loan repayments for a year. If they claimed for a full year, the repayments may well have been less than the total cost of the policy
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