Why You May be Entitled to Compensation for Being Mis-Sold PPI
This article – “PPI Compensation Explained” – provides information about how the mis-selling of PPI started, why it was allowed to escalate into a multi-billion pound scandal and continue for so long after it was identified as a “poor-value” product for consumers.
The aim of “PPI Compensation Explained” is to shed some light on the unfair practices that banks and other credit providers engaged in to deceive their customers, so that readers can understand why they may be entitled to compensation for being mis-sold PPI.
If, after reading this article, you would like your right to claim PPI compensation explained to you in greater depth, you are welcome to call the injurycompensationlaw.co.uk financial claims helpline and speak with one of our helpful claims advisors.
How The Mis-Selling of PPI Started
Many people consider the mis-selling of PPI a modern phenomenon, but it actually started back in the 1980s. More than thirty years ago, banks and other credit providers were keen to sell payment protection insurance to avoid customers defaulting on loans during periods of high unemployment (unemployment peaked at 11.9% in 1984 and did not fall to beneath 7% until 1989).
The product itself was also good for the consumer because if they were put out of work or had an extended period of sickness, the insurance policy would kick in to make sure their payments on credit arrangements were kept up to date. The problem was that the premium for the insurance policy was usually added to the amount of the loan at the beginning of the credit agreement and had interest charged on it.
For some credit consumers, the amount they were paying for their payment protection (with compound interest) was almost as much as the financial benefits they could obtain from the policy, and this came to a head in 1993 when Mr L W Price of Bristol successfully claimed compensation for being mis-sold PPI from his local branch of the (then) TSB Bank PLC.
Unfortunately for millions of credit consumers, Mr L W Price of Bristol signed a ten year non-disclosure agreement as part of his settlement, and the banks continued to cash in on mis-selling PPI.
The Scandal of PPI Compensation Explained
As the 1990s progressed, and the UK was in a relative boom, payment protection insurance became even more lucrative for the banks. Unlike car insurance or household insurance, very few claims were being made against PPI policies; and, due to the substantial commissions that banks received for selling the product, sales advisors were incentivised to sell more and more policies.
This led to unscrupulous sales advisors engaging in non-compliant practices to meet sales targets and earn sales bonuses and promotions. The controls that should have been in place to ensure the compliant sale of PPI were removed when banks also incentivised sales managers, and thereafter the scandal of PPI escalated – with some sales advisors even selling the product to themselves to avoid being demoted.
As a result of the systematic mis-selling of PPI, millions of credit consumers were sold a product for which they were not eligible for the benefits or which would expire prior to the end of their credit agreement. In many cases, forceful selling tactics were used to increase sales, consumers were told that their loan was “protected” – without mentioning the nature of the protection or the cost of the insurance – or, when consumers declined to take the insurance product, PPI agreements were faked.
How was the Scandal Allowed to Continue?
It is a source of major embarrassment to the Financial Conduct Authority that the mis-selling of PPI went on for so long. PPI was identified as a “poor-value product” by Which? Magazine as early as 1998 and, in 2005, the Citizens Advice Bureau issued a “super complaint” to the Office of Fair Trading over the mis-selling of PPI.
How PPI claims work
Our process is really easy and we are here to guide you every step of the way…
Call or fill the form
One of our friendly helpful advisors will speak to you, with no pressure or obligation to proceed with a claim.
We check if you had PPI
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We process your claim
You receive your cash £££!
In 2006, the Financial Conduct Authority started issuing fines and enforcement procedures to companies who had been mis-selling PPI, but it was not until 2009 that the unfair practise of single premium PPI was outlawed. During this period, Which? Magazine published the report of a survey that concluded two million people had been sold PPI policies alongside loans that they would never be able to claim against.
Despite the demise of single premium PPI policies, banks and other credit providers continued to mis-sell PPI. A later survey published by Which? Magazine revealed that 1.3 million consumers had only taken out PPI policies because they were led to believe they would not be accepted for credit without insurance, and it was not until 2010 that the Competition Commission ruled that PPI could not be sold at the “point of sale” (of a credit agreement).
Claims for Compensation for being Mis-Sold PPI Start Cascading In
With new regulations passed that credit consumers could claim compensation for being mis-sold PPI retrospectively, millions of consumers took the opportunity to review their credit agreements and complain to their banks about the mis-selling of PPI.
From January 2011, the Financial Conduct Authority started monitoring the payments of PPI compensation paid by the banks and, to date, more than £18 billion has been recovered in PPI premiums, interest charged on PPI premiums, unwarranted fees and charges, and 8% statutory interest.
However, besieged by a cascade of PPI compensation claims, banks and other credit providers started randomly rejecting claims without justification. Complaints to the Financial Ombudsman Service started rolling in and, by November 2011, the independent financial disputes arbitrator had received more than one million complaints about how banks had handled claims for compensation for being mis-sold PPI.
Find Out if You are Entitled to Compensation for the Mis-Selling of PPI
Due to the methods used by the banks to disguise PPI payments, many consumers are unaware that they even have the product. Many more are aware that they had a PPI policy, but are not sure whether or not they are eligible to claim compensation for being mis-sold PPI.
The easy way to find out if you can make a claim for PPI compensation is to call the injurycompensationlaw.co.uk financial claims helpline and discuss the nature of any credit agreements you may have had in the past (or still have) with one of our helpful advisors.
All calls to our helpline are strictly confidential, and there is no obligation on you to take advantage of our financial claims services. Do not forget to mention if there are any elements of our “PPI Compensation Explained” article you are not sure about, or if you need help navigating the process of claiming compensation for the mis-selling of PPI.