PPI is a type of Accident, Sickness and Unemployment Insurance designed to cover the payments of the borrower in the event of a change in their circumstances leading to them being unable to meet the minimum monthly payment.
Claims for mis-sold PPI have been around for over 10 years now but despite the large number of complaints lodged along with the advertising campaign recently undertaken by the FCA, the majority of monies remain unclaimed and unrealised.
Whilst PPI as a product is not necessarily a bad one, it was unfortunately sold in circumstances which often rendered the policy itself worthless or simply not value for money.
Mis-Selling of PPI
There are numerous reasons why a policy may have been mis-sold by a bank or other financial institution. The main ones we see are:
- The policy was added without the knowledge or consent of the borrower;
- The policy was of no benefit to the borrower (e.g. if the borrower received full sick pay);
- The limitations and exclusions of the policy were not explained;
- The borrower was self-employed or retired;
- An expensive single premium policy was sold rather than the cheaper monthly premium equivalent;
- The borrower was told taking the policy was a requirement of the loan;
These are just some of the main reasons and many other types apply. With precedent being set all of the time, it may be that a previous claim you made was rejected which would now be upheld and compensation paid.
In November 2014, the Supreme Court rules in favour of the borrower in the case of Plevin v Paragon Personal Finance Ltd that an unfair relationship had been created due to the large levels of commission taken by Paragon which would likely have made the borrower opt against taking the policy.
The judge ruled that there was a tipping point over which the levels of commission were so obscene that such an unfair relationship would have been created. It has since transpired that the levels of commission being paid in the vast majority of PPI sales is well above that tipping point and where that is the case, compensation is due.
Accordingly, it is very important to check for mis-sale on these grounds – previously rejected claims would likely now be upheld and at FDM, we specialise in this area of law.
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