Payment Protection Insurance (PPI) is insurance intended to cover loan, finance or credit card payments in case you are made redundant or are too sick to work. More commonly referred to as 'PPI', it is also referred as 'payment cover' or 'Accident, sickness and unemployment cover' ('ASU' abbreviated).
By itself, PPI isn't a bad product. However, claims are being made due to various mis-selling practices by lenders, agents and brokers that have been rife throughout the financial services sector for approximately the last 15 years. The Financial Services Authority, or 'FSA', issued a new handbook at the end of 2010, identifying the most common mis-selling practices. The FSA described these practices as 'failings' and laid down guidelines for lenders to compensate customers who had been mis-sold PPI.
Banks initially challenged the legality of the FSA's measures by way of a judicial revi
Among the worst mis-selling practices were associated with 'single premium PPI', which was banned by the FSA in May 2009. This was when the policy was effectively payable by way of a lump sum payment, being added onto the financial loan as a 'one-off' premium at inception.
Lenders and brokers often recommended single premium PPI without taking reasonable steps to ascertain whether this was appropriate for the purchaser. In fact, single premium PPI was an especially bad deal for the consumer for a variety of reasons.
Firstly, it was frequently automatically contained in the overall loan quotation. Sometimes, this led to the situation where the customer was completely in the dark over the presence of the insurance policy. Customers ought to have been told about the policy from the outset and had the cost of the insurance policy explained to them separately to the overall price of the loan.
By itself, PPI isn't a bad product. However, claims are being made due to various mis-selling practices by lenders, agents and brokers that have been rife throughout the financial services sector for approximately the last 15 years. The Financial Services Authority, or 'FSA', issued a new handbook at the end of 2010, identifying the most common mis-selling practices. The FSA described these practices as 'failings' and laid down guidelines for lenders to compensate customers who had been mis-sold PPI.
Banks initially challenged the legality of the FSA's measures by way of a judicial revi
Among the worst mis-selling practices were associated with 'single premium PPI', which was banned by the FSA in May 2009. This was when the policy was effectively payable by way of a lump sum payment, being added onto the financial loan as a 'one-off' premium at inception.
Lenders and brokers often recommended single premium PPI without taking reasonable steps to ascertain whether this was appropriate for the purchaser. In fact, single premium PPI was an especially bad deal for the consumer for a variety of reasons.
Firstly, it was frequently automatically contained in the overall loan quotation. Sometimes, this led to the situation where the customer was completely in the dark over the presence of the insurance policy. Customers ought to have been told about the policy from the outset and had the cost of the insurance policy explained to them separately to the overall price of the loan.
Secondly, the product was poor value for money. Less expensive PPI was usually available elsewhere, but customers were rarely informed of this. In fact, they had been regularly given the impression that the product was compulsory, whereas, in reality, it was optional.
Thirdly, customers would frequently not be eligible for a pro-rata refund in cases where the loan had been repaid early. Put simply, the customer may have purchased payment protection for the duration of the term at the start. However, if they re-financed at some stage throughout the term, they would not have been entitled to any rebate of the PPI for that remaining period.
This sort of PPI policy was clearly unsuitable for customers who had been likely to re-finance during the term, or who had been due to receive some dividend, such as inheritance, enabling them to repay the balance. However, the lack of pro-rata refunds was seldom revealed to customers, effectively providing them with little choice in the matter. Brokers often simply failed to make enquiries as to the likelihood of the loan being repaid early, or the need for flexibility generally.
Fourthly, lenders frequently failed to disclose to the customer that single premium PPI would be put onto the amount provided under the agreement, or that interest would be payable on the premium. This often made the loan much more expensive than the customer realised.
Finally, the term of the cover for single premium PPI was often shorter than the term of the loan itself. Customers were rarely advised about this fact, whereas they ought to have been given the effects of this mis-match explained to them. For instance, in the event the loan was for a five-year term, but the duration of cover was just for three years, the customer would have been ineligible to claim if they were made redundant in the fourth or fifth year of the loan. Many customers were unaware of this. In essence, single premium PPI was the most glaring illustration of a bad product for the consumer within the PPI market. It is also the area in which mis-selling practices were most common and most grave. It was for these reasons that the FSA banned the sale of single premium PPI alongside loans.
If you acquired a single premium PPI policy, it is very likely that you will have a powerful claim for a refund. Because the whole premium was front-loaded, interest will have been charged on the entire PPI element of the product from the start. This makes the interest part of your claim substantial.
You should be aware that if, but for the mis-selling by the lender, you would probably have decided on a different type of PPI policy (for example, one payable by regular monthly instalments) you may only be eligible to reclaim the gap between the single premium PPI policy and the policy that you would have otherwise bought. This might limit the total amount of your compensation.
If you believe that you would not have obtained any kind of PPI were it not for the mis-selling, then you will need to make this clear when making your claim. In some instances, PPI of any type would have be
Thirdly, customers would frequently not be eligible for a pro-rata refund in cases where the loan had been repaid early. Put simply, the customer may have purchased payment protection for the duration of the term at the start. However, if they re-financed at some stage throughout the term, they would not have been entitled to any rebate of the PPI for that remaining period.
This sort of PPI policy was clearly unsuitable for customers who had been likely to re-finance during the term, or who had been due to receive some dividend, such as inheritance, enabling them to repay the balance. However, the lack of pro-rata refunds was seldom revealed to customers, effectively providing them with little choice in the matter. Brokers often simply failed to make enquiries as to the likelihood of the loan being repaid early, or the need for flexibility generally.
Fourthly, lenders frequently failed to disclose to the customer that single premium PPI would be put onto the amount provided under the agreement, or that interest would be payable on the premium. This often made the loan much more expensive than the customer realised.
Finally, the term of the cover for single premium PPI was often shorter than the term of the loan itself. Customers were rarely advised about this fact, whereas they ought to have been given the effects of this mis-match explained to them. For instance, in the event the loan was for a five-year term, but the duration of cover was just for three years, the customer would have been ineligible to claim if they were made redundant in the fourth or fifth year of the loan. Many customers were unaware of this. In essence, single premium PPI was the most glaring illustration of a bad product for the consumer within the PPI market. It is also the area in which mis-selling practices were most common and most grave. It was for these reasons that the FSA banned the sale of single premium PPI alongside loans.
If you acquired a single premium PPI policy, it is very likely that you will have a powerful claim for a refund. Because the whole premium was front-loaded, interest will have been charged on the entire PPI element of the product from the start. This makes the interest part of your claim substantial.
You should be aware that if, but for the mis-selling by the lender, you would probably have decided on a different type of PPI policy (for example, one payable by regular monthly instalments) you may only be eligible to reclaim the gap between the single premium PPI policy and the policy that you would have otherwise bought. This might limit the total amount of your compensation.
If you believe that you would not have obtained any kind of PPI were it not for the mis-selling, then you will need to make this clear when making your claim. In some instances, PPI of any type would have be
Fourthly, lenders frequently failed to disclose to the customer that single premium PPI would be put onto the amount provided under the agreement, or that interest would be payable on the premium. This often made the loan much more expensive than the customer realised.
Finally, the term of the cover for single premium PPI was often shorter than the term of the loan itself. Customers were rarely advised about this fact, whereas they ought to have been given the effects of this mis-match explained to them. For instance, in the event the loan was for a five-year term, but the duration of cover was just for three years, the customer would have been ineligible to claim if they were made redundant in the fourth or fifth year of the loan. Many customers were unaware of this. In essence, single premium PPI was the most glaring illustration of a bad product for the consumer within the PPI market. It is also the area in which mis-selling practices were most common and most grave. It was for these reasons that the FSA banned the sale of single premium PPI alongside loans.
If you acquired a single premium PPI policy, it is very likely that you will have a powerful claim for a refund. Because the whole premium was front-loaded, interest will have been charged on the entire PPI element of the product from the start. This makes the interest part of your claim substantial.
You should be aware that if, but for the mis-selling by the lender, you would probably have decided on a different type of PPI policy (for example, one payable by regular monthly instalments) you may only be eligible to reclaim the gap between the single premium PPI policy and the policy that you would have otherwise bought. This might limit the total amount of your compensation.
If you believe that you would not have obtained any kind of PPI were it not for the mis-selling, then you will need to make this clear when making your claim. In some instances, PPI of any type would have been entirely inappropriate for that particular customer. For instance, you might have been unemployed or had a pre-existing medical condition, causing you to be ineligible to claim on the policy.
Single premium PPI was the worst illustration of mis-selling within the PPI market. However, there are many other instances of mis-selling practices by lenders or brokers. You might be qualified for the full refund of your PPI premiums, plus interest.
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Finally, the term of the cover for single premium PPI was often shorter than the term of the loan itself. Customers were rarely advised about this fact, whereas they ought to have been given the effects of this mis-match explained to them. For instance, in the event the loan was for a five-year term, but the duration of cover was just for three years, the customer would have been ineligible to claim if they were made redundant in the fourth or fifth year of the loan. Many customers were unaware of this. In essence, single premium PPI was the most glaring illustration of a bad product for the consumer within the PPI market. It is also the area in which mis-selling practices were most common and most grave. It was for these reasons that the FSA banned the sale of single premium PPI alongside loans.
If you acquired a single premium PPI policy, it is very likely that you will have a powerful claim for a refund. Because the whole premium was front-loaded, interest will have been charged on the entire PPI element of the product from the start. This makes the interest part of your claim substantial.
You should be aware that if, but for the mis-selling by the lender, you would probably have decided on a different type of PPI policy (for example, one payable by regular monthly instalments) you may only be eligible to reclaim the gap between the single premium PPI policy and the policy that you would have otherwise bought. This might limit the total amount of your compensation.
If you believe that you would not have obtained any kind of PPI were it not for the mis-selling, then you will need to make this clear when making your claim. In some instances, PPI of any type would have been entirely inappropriate for that particular customer. For instance, you might have been unemployed or had a pre-existing medical condition, causing you to be ineligible to claim on the policy.
Single premium PPI was the worst illustration of mis-selling within the PPI market. However, there are many other instances of mis-selling practices by lenders or brokers. You might be qualified for the full refund of your PPI premiums, plus interest.
About the Author:
To get more information about how to reclaim Standard Life PPI you need to visit PPI claims online for advice on what you must do to claim back what's really yours.