PPI Insurance


Affordable Housing by Tessalar, via Wikimedia Commons

Many of you have probably witnessed pesky adverts, texts, emails, phones calls or even letters relating to PPI insurance, calling for people to file law suits against the banks for miss-sold PPI. Promising large cash payments, a quick and easy process, where they do all the work; how can homeowners say no?

For many of you, especially non-homeowners, you are probably unsure exactly what PPI is. It is known as Payment Protection Insurance,  and is a common insurance product sold alongside debt, which will pay out when the consumer is unable to afford their repayments due to particular circumstances appertaining to, death, illnesses and loss of employment.

However, this type of insurance has a very high rejected claims rate in comparison with other insurances as it is often taken with little consideration by the individual customer who gives little consideration to whether the policy meets their circumstances. PPI was generally mis-sold to clients for over a decade and has  seen many people filling lawsuits in order to claw some of their money back. Strict rules have now been put in place to control the way that credit companies can sell PPI insurance. Clearly the banks had had poor judgement in not offering more assistance alongside their PPI insurances, in order to make sure it is what the client needed.

Putting aside the banks’ ethical role to be more informative about PPI, the lawyers have realised their opportunity to cash in on this debacle,  resulting in the bombardment of emails and letters to the general public. There has been increasing concern over the past few years in the increasing “no win, no fee” type of litigation. What we are seeing here is massive encouragement to file lawsuits, which house owners are quite happy to take up in order to gain a cash sum. I know some of you are thinking that this is money they deserve, seeing that banks should have not mis-sold insurance in the first instance. However, it has always been the case that you should “read the small print” before you go away and sign documents, and has never been more applicable!

Many of these claimants are people who entered into the PPI agreement as it appeared to be a good idea. But now 5 years on, their job is pretty secure, and they have paid the majority of their mortgage off. They see this advert on TV claiming they may be able to claim £5000 back and naturally, how can they let the opportunity pass! Some people have filed lawsuits who have even claimed on their insurance policy in the past and there may be worse claims that have been made by people who have not even purchased PPI. This is undoubtedly a ludicrous situation!

I have very much digressed away from the wrongdoing of the banks; I in no way believe that their behaviour in all this has been acceptable. But I believe the bigger issue is the culture which surrounds the “no win, no fee” claims management companies. Similar activities can very much be seen in the car insurance industry. It is a practice that can have no place in a honest and fair society.


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