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PPI may be being mis-sold

PPI customers led up the garden path

10-September-2008, By Becca Talbot becca.talbot@consumerchoices.co.uk

Almost 1.3 million people have taken out Payment Protection Insurance, under the pretense that it would improve their chances of being approved for a credit card, according to new research carried out by Which?

More than 9.8 million people in the UK have credit cards with PPI attached. Of these, 13% wrongly believed that getting PPI was a condition of their credit card deal or that their application was more likely to be accepted if they had it.

With credit card PPI worth over £970 million a year to the industry, and each policy costing consumers an average of £127.60, it’s easy to see why almost three in ten cardholders were told by their providers that having it is a good idea.

Credit card cover makes up the second largest slice of the PPI industry, accounting for 22% of the PPI market; however, only an average of 11% is ever successfully claimed.

PPI is sold alongside credit cards, loans, finance agreements and mortgages, to cover repayments if people cannot work because of illness, or if they are made unemployed. Credit and store card PPI often only covers the minimum amount that must be paid each month, meaning your balance may never reduce.

Doug Taylor, Personal Finance Campaigner, Which? said: “Credit card PPI is a modern day snake oil – it’s a useless product, expensive and poorly designed. As the credit crunch continues to take hold, people want to be protected and have peace of mind, but credit card PPI, like a house of cards, won't give you the support you need.

“In this time of economic uncertainty, people are effectively throwing away £970 million each year, when they should be encouraged to seek independent financial advice about protecting their finances. No one should have to take out PPI on their credit card. Credit card PPI is the elephant in the room that can no longer be ignored.”

If you have PPI on any financial products, then it may have been mis-sold to you. Follow this simple checklist to see if you might be able to claim your money back. If you can answer ‘no’ to one or more of these questions, then you may have been mis-sold your PPI:

• Optional - Did the adviser make it clear that the insurance was optional (if this was the case)?
• Exclusions - Did the adviser tell you about the ‘significant exclusions’ under the policy? For example, the exclusion that states you won’t be covered for any pre-existing medical conditions, you might not be covered if you are over 65, if you are self employed or on a fixed term contract?
• Paying for insurance up front - If you took out a loan or finance agreement, did the adviser make it clear that you would have to pay for the insurance up front in a single payment?
• Borrowing to pay for insurance - If you had to pay for the insurance as a single premium, did the adviser make it clear that the insurance cost would be added to the loan and you would be paying interest on it?
• Insurance expires before loan - If your PPI policy expires before your loan or finance agreement does, you’ll be paying interest on insurance that is no longer in force. Did the adviser make this clear?

If you answered ‘no’ to one or more of these questions, then you may be eligible to claim back your mis-sold PPI. For more information on how to make a complaint, and begin the process of claiming back your PPI, visit www.which.co.uk/ppi.

Chris Eagle, commercial manager at CreditChoices.co.uk said: “We recommend that people do not take out PPI insurance unless they are worried about the long term security of their household income. If you do decide to take out PPI insurance then shop around, the deals offered by lenders are often very uncompetitive.”

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