Have you been mis-sold a PPI policy?

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Have you been mis-sold a PPI policy?

We’ve spent a lot of time writing about the mis-sold PPI scandal that has rocked the U.K., but let’s take a step back for a second.

Let’s ask ourselves – What exactly is PPI, how did it start, and what is it supposed to do?

PPI stands for payment protection insurance. It sometimes goes by the names credit insurance, loan repayment insurance, or credit protection insurance.

This is an insurance product that allows customers to insure repayment of loans if the borrower dies, becomes ill, loses a job, or otherwise faces life circumstances that prevent them from earning an income that will allow them to service their debt. This insurance can cover car loans, home mortgages, and loans from financial companies. There are some credit card agreements that include a small standard form of PPI.

Typically, PPI covers the minimum loan or overdraft payment for a specific time period such as 12 months. After this time, the borrower is supposed to be able to find other ways of repaying the debt.

Although the policy is purchased by the consumer – an average individual – the benefit paid goes to the creditor such as the bank that extended a car loan or a home mortgage.

Many loan and credit card companies sell PPI insurance at the same time they sell the initial credit product. Sometimes consumers are not aware that they even carry PPI insurance.

As of May 2008, approximately 20 million PPI policies existed in the U.K. and began growing at a rate of several million policies per year purchased thereafter. Surveys, however, showed that 40% of policy holders said that they were unaware that they had a policy.

According to the BBC news, PPI was mis-sold and complaints about it were mishandled for more than a decade with much of this mis-selling carried out not only by banks, but also by third-party brokers of these policies.

Often this mis-selling was incentivized by large commissions given to the sales people. Some sales people would say only that a person’s loan was protected without giving the details of the PPI protection. Other sales people would incorrectly state that PPI insurance could improve a borrower’s chance of obtaining a loan, or they may state that this insurance is mandatory – both of which are untrue.

Claims against mis-sold PPI have been increasing. The financial ombudsman service in its 2010 annual report stated that 30% of new cases refer to PPI policies.

If you believe that you have been mis-sold a policy, please contact us.


MARCH 23RD 2020

At this time we are continuing business as usual however our team will now largely be working from home. This limits our phone contact availability. Customer support remains available Monday to Friday but please email in to info@oraclelegal.com with your query. We aim to get back to you within 48 hours. On receipt of PPI refunds our fees remain payable and can be paid via our website www.oraclelegal.co.uk/payments/ or via BACS. We are also working on some other areas of potential claim for you in connection with your PPI and will be in touch shortly where applicable to present this to you.

IMPORTANT:The last day we can accept a new claim is Friday 23rd August – midday – to ensure the paperwork is properly processed and lodged with your lender before the cut-off time.