Many lenders are unfairly rejecting mis-selling claims from payment protection insurance (PPI) customers.
According to new data released this week, some 90% of policyholders who had their PPI mis-selling claims rejected by lenders are finding success at the Financial Ombudsman Service (FOS).
As a result, the Ombudsman is urging policyholders to seek a substantial payout from lenders, rather than simply accepting the "gesture" payments initially offered by many lenders.
If you feel you may have been mis-sold a policy, download our PPI reclaim letter and visit the FOS’ online PPI resource centre for further information.
Good product, bad sales technique
PPI promises to meet your repayments on a loan, mortgage or credit card, should you become unable to.
With unemployment rising and even the largest firms proving vulnerable in the recession, demand for PPI has surged in recent months.
Unfortunately, because it is so profitable to lenders – they can pocket as much as £1,200 from a policy that costs them just £20 – mis-selling of policies has been rife in the industry for years.
Two of the most popular tricks employed by banks include wrongly implying that PPI is mandatory when taking out credit, or selling a policy to a customer who has no chance of making a claim.
As a result, the Financial Services Authority and competition Commission have been cracking down on lenders, handing out massive fines to Alliance & Leicester and Egg in recent months.
PPI not always bad
Yet despite its bad reputation, PPI is by no means a terrible product. In fact, with unemployment at 1.92 million and rising, the argument for covering any existing debt is stronger than ever.
The golden rule when looking for a policy is to always shop around, making sure you include independent providers in your search as these can cost a fraction of their high street rivals.
For example, cover for a £10,000 loan over four years will cost you a total of £415 at British Insurance.
However, automatically tack PPI onto a loan at Alliance & Leicester and your cover will cost you £2,697 – that’s over six times the price.
