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Nearly everyone has some type of credit accounts. It could be a loan, credit card, store card, vehicle finance, mortgage or any other type of finance. If you have or recently had credit is more than likely you had PPI and if this is the case it is also likely that you may have been mis-sold the policy.
If you think you have been mis-sold and you think you have a PPI claim, here is some good information you should know:
1. What is PPI?
The purpose of PPI is that it covers your debt repayments if you cannot work, become ill, have an accident or if you are made redundant.
For this reason it is commonly sold alongside credit agreements to protect both you and the lender in the event that you cannot make the repayments.
It's not that PPI is a bad product, the problem is the way policies have been sold to the consumer.
2. How do I find out if I have PPI?
First look at the documents that were sent to you at the time you took out your loan, credit card, mortgage or other type of finance agreement.
The PPI may be part of your repayment statements and might be listed as 'payment protection insurance', 'loan protection cover', 'card protection cover' or something similar.
If you do not have the paperwork or if it is not clear, contact your lender or finance provider and ask whether you have PPI.
If they do not have a reference number, but you believe that you have been sold PPI, ask them to provide details for whoever the underwriter was for their PPI products.
3. How do I know if I was mis-sold PPI?
PPI may have been mis-sold to you if it turns out that the policy is not appropriate for your needs. Set out below is a list of the reasons why such a policy may have been mis-sold to you.
- You were aged under 18 or over 65 when the PPI was sold to you. The insurance should not be sold to people outside of these age ranges.
- You worked less than 16 hours a week when the PPI was sold to you. PPI policies do not cover part-time workers.
- You were employed on a temporary or contract basis when the PPI was sold to you. PPI policies do not cover temporary or contract workers.
- You were self-employed when the PPI was sold to you. Protection for unemployment is not always applicable with these policies and you should have been advised of the employment stipulations with the policy.
- You had an existing illness when the PPI was sold to you. Policies are probably invalid if you have a pre-existing medical condition, especially if your illness could worsen, leading to a loss of income.
- You were not informed that the PPI policy would not cover conditions such as stress and backache. PPI policies do not usually cover mental health issues i.e. stress or depression, nor common muscular problems.
- You were aware you may become unemployed when the PPI was sold to you. Some PPI policies do not cover a known or possible loss of income and this should have been explained to you.
- You were not told about the cost of the insurance (or not told you were buying it at all).
- You were not asked about any other insurance, similar to PPI, that you may have already been covered by. You may have already been covered by an existing insurance policy.
- You were told that the PPI was necessary for you to get the loan. A loan is not dependent upon having Payment Protection Insurance. It is entirely optional.
- You were not told that the same policy could potentially be bought for cheaper elsewhere. You do not have to obtain the PPI policy from any specific lender and there are many such policies available. You are supposed to be given the option to source the policy (should you require the same) anywhere.
- You applied for a loan online where the box for PPI was automatically ticked. Many application forms for “on-line” loans or credit cards has a tick box to either opt in or out of PPI. In some cases, the tick box was already ticked and the applicant had to opt out of having the insurance by un-ticking the box. After July 2007 this was changed following the FSA (Financial Services Authority) intervention.
A salesperson should have gone through all of the above points to make sure the policy was suitable. However, some companies misled consumers by failing to explain what it was for and who it applied to.
Consumers were advised that they needed to pay for such a policy if they wanted the loan or that it would cost them less if the policy was taken out with the loan.
The policies are purely optional and do NOT have to be purchased from the same company providing the loan.
In some instances, such policies were added to the loan without the knowledge or consent of the consumer by stating that the policy was “fully protected” without explaining that this actually meant a PPI policy would be added to the loan at a further cost.
How do I reclaim mis-sold PPI?
Write to your lender and state that you think you have been mis-sold PPI and therefore ask them to review your file. If your lender rejects your request, take the matter to the Financial Ombudsman Service.