How Payment Protection Insurance Was Wilfully Mis-sold

By Author: Georgina Rahman
Total Articles: 7
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Payment protection insurance (PPI) is a type of insurance sold to cover repayments of a loan should the borrower be unable to make them. The reasons for this can be many; the borrower may die, be fired or made redundant, fall ill or sustain a serious injury. In such cases, they could make a claim on their PPI to cover the costs. On the face of it, it’s a pretty good deal and by 2008 the rate of uptake had reached 7 million new policies a year. That was 20 million PPI policies in the whole of the UK.

However, payment protection claims also had an unusually high refusal rate. The number of rejected PPI claims led to a number of people taking action against the lenders. In many cases, it was found borrowers had been mis-sold payment protection insurance. The reasons for the mis-selling were as many and varied as the reasons people may have taken the policies out in the first place: borrowers may have been ineligible to have ever made a payment protection insurance claim due to being self-employed; the borrower may have been sold the PPI without having it fully explained to them; in some of the worst cases of wilful fraud, ...
... sellers were telling borrowers PPI was compulsory, that taking it out would increase the likelihood of their securing the original loan, or even adding it to their bill without telling them.

But why did the lenders mis-sell payment protection insurance on such a massive scale? Money. Salesman typically earned large commissions on each PPI policy they sold. With any form of insurance, the lender takes a gamble that customers will pay them more money than they claim back. In the case of payment protection insurance, the chances of a successful claim being made were so low – due to the policy’s strict terms – that lenders could expect to make more money from it than from the interest on the original loan.

In April 2011, the UK courts ruled in favour of consumers and ordered the lenders to pay back any legitimate claims for mis-sold payment protection insurance. Victims of the scam stand to reclaim large sums of money, as the compensation covers not just the money paid out to the lender, but also statutory interest. Even if you have paid off your policy in full, you can still make a payment protection insurance claim if the original policy was mis-sold. The ruling against the lenders marked a watershed moment in the battle for consumer rights and major banks have already set up multimillion pound funds to cover the expected cost of the claims.

If you think you may have been mis-sold payment protection insurance, contact ABC Claims Management. They will handle the claim for you and keep you informed of its progress every step of the way.
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