In 2006 The Office of Fair Trading and The Financial Ombudsman Service launched investigations into the Payment Protection Insurance market. Payment Protection is a type of cover designed to insure a borrower against loss of employment due to redundancy, accident or illness. It came under scrutiny; however, regarding the way it was being sold. A high number of complaints has been received and many people felt they had been duped into buying a policy that was unsuitable for them or represented very poor value for money.
Following further investigation by The Financial Services Authority (FSA), several key lenders and many smaller businesses were given fines for their failures regarding the sales of Payment protection - Capital One was just one of these lenders.
In total, the FSA investigated 335,000 Capital One credit card PPI sales. It found that the lender had failed to issue policy documentation to customers who purchased the cover between January 2005 and April 2006. A spokesperson for the FSA said:
'It is unacceptable for people to be put at risk of buying unsuitable protection insurance through not being given the right information at the time.'
The failure meant many Capital One customers did not understand the exemptions attached to their policies and did not have a chance to read through the policy documentation, and cancel the cover if they wished, within the crucial statutory cooling-off period. The FSA also criticised the telephone scripts used by sales staff stating they did not provide adequate details of the policy features and exemptions. Capital One was also criticised for failing to adequately monitor telephone sales calls. After being given the fine the lender said it accepted the decision and had cooperated with the FSA throughout. The FSA spokesperson seemed to indicate the fine was a warning to others stating:
'This fine and other recent PPI-related enforcement cases show we will crack down where firms fail to treat their customers fairly in this area.'
Indeed, the FSA did crackdown on Payment Protection with the highest fine of £7 million being handed down to Alliance and Leicester. For many customers; however, the industry tighten –up came too light as they had already fallen victim to mis-selling. Fortunately, the FSA investigation drew many people's attention to the issue and made it considerably easier for unhappy customers to try and claim Payment Protection refunds.
Since 2005, 1.5 million people have filed a PPI complaint. The figure is huge and gives a small indication of just how huge the problem was. Many people are unsure whether they have the cover, though, where their policy was mis-sold and whether they could be entitled to a refund.
Payment Protection Insurance is sold alongside a variety of different products including mortgages, personal loans, hire purchase agreements, store and credit cards. It can be know be a number of different names including: loan cover; accident, sickness and unemployment cover and loan protect. It may have been sold to you as an outright policy at the start of a loan or it may be a monthly policy that varies according to your credit or store card balance. Despite the significant differences in what it is called, its cost and how it is applied Payment Protection Insurance is, essentially, the same problem. It is meant to cover you against the risk of financial hardship if you lose your job or cannot work because of sickness or accident by taking over your debt repayments. The trouble is, if your policy has been mis-sold you may not be covered so you may be paying for a policy that you could never use.
Commonly Payment protection is mis-sold in one of two ways either you are given incomplete or incorrect information or you would sold a policy that was unsuitable.
When you bought your policy your lender should have taken the time to explain the full terms and conditions and costs. This information is vital to help you make a decision as to whether you wanted or needed the cover – if this did not happen you could make a claim for mis-selling. On the other hand if your lender gave you incorrect information you could also make a claim as you based your decision on statements that were untrue. Examples here include: your lenders telling you, you had to have the cover or it would improve your chance of being given the loan.
The other side of mis-selling applies to customers who should, quite simply, never have been sold the cover because the insurance had exemptions making them unsuitable. For example, many policies exclude the over-65s. Another example is someone who was unemployed or in full time education – why would someone without a job need cover for loss of employment?
I you would like to make a PPI claim against Capital One or any other lender, call us today on 0207 471 2000. We work on a no win no fee* basis and we could resolve your claim in just 8 weeks.