From the moment the Payment Protection Insurance scandal came to light, people have been struggling to understand exactly what PPI is all about and whether or not they were affected. Before you can figure out if you were mis-sold PPI, it is important to understand what PPI is and the truth about mis-sold payment protection insurance.
How Does Payment Protection Insurance Work?
The theory, or original intent, behind PPI was that it would cover the borrower in case circumstances arise that would make them unable to make regularly scheduled payments. Its purpose was to protect the borrower from unemployment, serious accidents or long term illnesses, covering the payments that the borrower would be unable to make. It made sense and was easy to sell to people, even if there was no way the policy would ever pay out for them, as was the case with over 80 percent of all PPI claims.
The Widespread Mis-Selling of PPI
When it was discovered by the lenders that PPI was a high profit addition to insurance policies, they began the process of selling PPI policies in a variety of unethical manners. In many cases employees were offered commission for every PPI they managed to sell, which resulted in them adding PPI onto policies without the knowledge of the borrower. In other cases they would sell PPI to people who they knew were ineligible, meaning that even if they fell ill they would never be able to make a claim.
How Can You Reclaim Your Mis-Sold PPI?
There are steps that can be taken to reclaim any money you may have unwittingly spent on PPI. The first thing to do would be to identify whether or not you have been paying for PPI on any of your insurance policies, including credit cards, mortgages or bank loans. After that you should write a formal statement to your bank asking for a full refund. They are required to get back to you within 8 weeks.
Plenty of analysts have estimated that the cost to the banks could end up being greater than 10 billion pounds, making it the largest compensation scheme the UK has ever seen. The implications of this scandal are astounding and have made consumers think twice when they apply for a loan or credit card. It will take a long time before the banks can earn back the trust they have lost with the general public.