Misselling Payment Protection Insurance Cover
How to Claim Back PPIs Due to the Misselling of a Personal Loan
Nov 5, 2009
Many customers take out loan protection insurance when purchasing a loan for redundancy insurance or critical illness cover. This is often necessary to offer some sort of security should anything happen.
However, it has come to light that many customers have purchased loans without realising that payment protection is attached, or have been missold credit cover with their loans, resulting in paying unnecessary cover.
How the Misselling of Payment Protection Could Write off Debt
The floodgates could open for other borrowers who could get their credit card debts wiped out due to being missold credit card loans with payment protection which was unnecessary or not asked for.
The report, “PPI Misselling Victim has £8000 Debt Written Off” (Martin Lewis, Oct 2009) describes how the lender, MBNA, failed to sue a housewife for non-payment of a premium because the judge ruled the lender had breached the Consumer Credit Act when selling PPI without her knowledge. Further, MBNA failed to produce a signed copy of the credit agreement to prove otherwise. Having miss-sold the loan insurance, the loan was written off.
How to Save Money With PPI Insurance
The following pointers may help the credit consumer ensure against unnecessary payment of loan insurance or of being overcharged for this cover.
- It is important to note that the APR of a loan does not include the cost of payment protection. The consumer should obtain the cost of the cover alone and work out if it is necessary and if so, seek out more competitive cover.
- If the consumer is unhappy with the cost of the cover, he or she should be able to terminate the agreement. Be warned that although some lenders will allow the consumer to keep the loan, others may charge an admin fee or require notice.
- Some consumers may already be covered by another policy without realising, meaning they could be paying for unnecessary cover.
- Most importantly, check that the policy cover is appropriate to the consumer’s circumstances.
Getting a Fair Deal With Payment Protection Cover
If the consumer suspects unfair selling of payment protection with the loan, a claim can be made by the following actions:
- Communicate to the party concerned in the first instance
- If this fails, take the complaint further up the line
- Keep all letters of correspondence, names, times and dates of telephone calls
- Give the financial institution a chance to reply with a final response
- If the final response is not forthcoming after eight weeks, the financial ombudsman service (FOB) may be approached.
- Keeping all records of correspondence will streamline the process of the complaint
The Financial Services Association (FSA) has set out six consumer outcomes within their initiative, “Treating Customers Fairly,” two of which states that financial institutions must sell products that fit the consumers’ needs and provide them with clear information.
Inappropriate Loan Protection Insurance
Some credit consumers may be paying more fees on their loan than they realise if payment protection has been included in the agreement without their knowledge. Some lenders charge dearly for payment protection when it may not even be necessary. It is worth checking out the loan agreement to see whether this cover has been included and its cost.
If the customer suspects a misselling of a credit agreement and a satisfactory outcome has not been reached, advice from the FOB or the FSA might be the best route. In certain cases, as can be seen from the report above, the debt could be written off.
Note: This article serves to inform. For more specialised help, seek the advice of a solicitor.
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