PPI: The Real Facts and Figures

19 Oct

With Payment Protection Insurance (PPI) one of the biggest scandals to hit the news in 2012, people have been bombarded with numbers and information from a whole host of different sources. With 2013 looking to see the dispute between borrowers and lenders trundle on; it is already set to be another year full of complaints and claims. With so much to try and process on a topic that many people are already unsure of; people have been seeking to gain a better understanding of the issues surrounding PPI, mainly what exactly it is; why it has had so much media attention as of late and what the real facts and figures surrounding it are.

What Is It?

PPI is insurance offered to consumers by lenders, such as the bank. It is paid for in conjunction with the borrowing of money for a credit card, loan or mortgage. It is designed to make sure people can still meet their payment deadlines if they fall ill or become unable to work any longer.

Where Did It Go Wrong?

2012 played host to the real downfall of PPI, when it was revealed that banks had been mis-selling it to millions of their customers. What does mis-selling actually mean though? What were the issues with the PPI policies being sold to consumers? Here are the main problems that surfaced:

  • People were not made aware that they were paying for PPI.
  • Their PPI policy did not cover them for the entire duration of their payments.
  • Self-employed people were sold PPI that did not cover them properly.
  • People had adequate insurance elsewhere and did not need PPI.
  • People were told PPI was mandatory, when in-fact it should be optional.
  • People never needed or used their PPI but were still charged for it.

The Numbers

Given the increasing scale of the issue, various reliable sources have conducted extensive research into the exact nature of the scandal. With so many television and radio broadcasts and page upon page of newspaper and magazine articles all revealing new information regarding PPI on a near daily basis; what are the real figures in regards to the number of people affected by PPI and the money involved?

  • As much as 31 million PPI policies have been sold by various banks in the last twelve years.
  • £14 billion has already been identified as payment due by the lenders.
  • Lloyds Group was the worst culprit of PPI mis-selling, having already spent £4.3 billion on reimbursing their customers.
  • Lloyds receive so many complaints regarding PPI they require 6000 members of staff purely to process them.
  • The Financial Services Authority (FSA) estimateas many as 12 million letters were sent out by banks to their customers, explaining that they were the victims of mis-sold PPI policies.
  • Of all the PPI related complaints the Financial Ombudsmen Service have received since the turn of the millennium, over half came in 2012.
  • 6 out of every 10 cases taken up by the ombudsmen are successful.
  • The Financial Ombudsmen Service expects to help resolve an additional 245,000 PPI cases this year alone.
  • PPI related cases have already risen by 147%.

How Do I Make a Claim?

With the enormity of the issue now perhaps more apparent, you may have a better understanding of the importance of claiming back from the banks what they have so shamefully taken from the public.

Those who believe they have been mis-sold PPI can either contact their bank directly to request a refund or – especially if you ask your bank but are turned away – you can contact the ombudsmen and request they handle the case on your behalf by approaching the bank for you.

One of the most common techniques involves using a claims company who will only require some basic info from you to be able to do the hard work and try and get your money back in exchange for a percentage of your rebate.

Whichever method implemented, banks have evidently already forked out millions to compensate their wronged customers. With millions of pounds still sitting, just waiting to be claimed, checking your policy for any rogue charges is definitely worth your time.

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