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Barclays Loan Protection

Between 1.6 million and 2.4 million customers are thought to have purchase loan protection insurance from Barclays Bank. It is difficult to estimate how many of these PPI policies may have been mis-sold, but so far the lender has paid out more than £200 million in compensation. In addition, Barclays has allocated £1 billion to deal with future claims for mis-selling.

Barclays Loan Protection is a type of insurance sold with loans and mortgages. It insures the customer against the loss of unemployment due to sickness, accident or redundancy. The cover works by stepping in to take over debt repayments to prevent financial hardship. The trouble with this type of cover; however, is that it can be very expensive and often doesn’t offer the level of cover customers anticipate.

Barclays Loan Protection, like most other types of loan protection, is sold alongside personal loans and mortgages. The cost of the insurance cover is often incorporated into monthly repayments meanings customers aren’t always sure just how much they are paying for the insurance. A typical loan PPI policy can cost between 13%-25% of the core loan value. On a £10,000 loan, therefore, you may expect to pay between £1,300-£2,500 for the insurance. What many people don’t realise, though, is that the cover usually attracts interest at the same rate of interest as your loan meaning it can significantly increase your total level of debt.

Despite the potentially high costs of Barclays Loan Protection many feel the cover is a worthwhile financial safety net. The trouble with all loan protection, though, is that it often has a high number of exemptions. Exemptions are things that are not covered by your policy. For example, most policies do not cover the policyholder if they are unable to work due to back pain, stress or depression.

Perhaps the most well-known issue connected with Barclays Loan Protection and similar types of cover is that it has been mis-sold. The PPI mis-selling scandal has dogged the lending world in recent years and many have theorised the exact cause. Some attribute the problem to a lack of staff training while others blame greed from lenders some of whom adopted a ‘sell at all cost’ attitude. It is true that loan insurance has, in the past, been very profitable for lenders. An investigation by The Competition Commission found the average rate of payouts on Loan PPI policies is just 15%. This, effectively, means for every £1 spent on loan PPI the lender would make £0.85 profit – an undeniably huge rate of return! Whatever the cause of the PPI mis-selling scandal its affects have proved to be far reaching.

If you were given incorrect information when you purchased your loan insurance policy or you were mislead into taking out the cover you have the right to make a claim. You can also make a complaint if you were sold a policy that has proved to be unsuitable for your needs. Some examples of this include people over 65, who were sold a policy that did not cover a person of their age, and people who were not in employment who were ‘recommended’ the cover. To start your PPI refund claim or just to find out more, call the claims team on 0207 471 2000.

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