Payment Protection Insurance (PPI) has been sold for more than ten years to millions of people in this country, not just with Loans but also attached to credit cards, mortgages and other financial agreements.
PPI was actually a useful product. Protecting your Loan repayments if you come out of work because of accident, sickness or unemployment, which is when you would need the payments protecting most. However, there were problems with how the PPI was sold.
The problem partly came from the product itself, but the problem mainly stemmed from the way the advisors and Lenders sold the PPI policy to customers. It was much easier to sell PPI alongside a Loan because people wanted to borrow money and therefore agreed to the advisor or Lenders suggestion to take out PPI.
Lenders identified that customers are more likely to come out of work during the length of the Loan repayments, especially with some Loans running as long as five or ten years. There was a possibility the customer would run into trouble at some stage of repaying the Loan and this was often used to pressure customers into buying PPI.
PPI policies were frequently sold by Banks and Loan companies because they were highly profitable. Sales staff were incentivised to sell as many as possible with and the intense competition, which meant that the rules put in place to safeguard the consumer were often ignored.
The Citizens Advice Bureau performed an analysis of the PPI marketing and found that only 15% of PPI policy holders were able to make a successful claim, whereas the success rate for motor insurance claims is 74% and 55% for household claims. This shows how profitable PPI policies were for the Lenders that sold them, with less than one in five people able to make a successful claim. It is because of this that the PPI policies were so profitable for the Lenders.
PPI was even added to some Loan agreements without the client being aware they had bought the product. Some finance applications required you to 'opt-out' of PPI, but this was often not even mentioned. If you topped up that Loan one or more times, it was not unusual for the Bank to add PPI to the new Loan again without ever asking you if you wanted it, needed it or were even eligible to claim on the PPI policy.
The Financial Conduct Authority (FCA), the organisation that regulates all UK Lenders, performed an audit of one firm and found they gave a bonus to sales staff based on the amount the customer paid for the product. The FCA listened to a call where sales staff colluded to intentionally overcharge a customer in order to help meet a sales target.
There was a recorded conversation that took place before they called the customer, where the sales person said:
"This is going to make my target...I'll end up with about a thousand pounds... We need to ring [the customer], I will do all the talking [and] you confirm the price."
The above example may be an isolated incident but it emphasises how the bonus schemes in place often lead to Lenders breaking the rules in order to secure their monthly remunerations.
PPI was often added to Loan agreements without the knowledge of those purchasing the products. Even if you're not sure, it is worth letting us check whether you had PPI.
If you were mis-sold your policy then you are eligible to make a PPI claim to recover what is rightfully yours. If your claim is successful, the Bank or Loan Company must refund all the premiums you paid, plus any interest and potentially 8% interest for each year you had PPI.
To find out how much we can help you claim back for your mis-sold Natwest PPI in 15 seconds CLICK HERE