MBNA Payment Protection
Most of us have owned a credit card at one time or another and, if you have, there is a good chance your lender offered you some form of payment protection cover. Payment protection cover protects the credit cardholder if they are involuntarily unable to work. The cover can provide valuable protection, but it is also controversial.
Critics of credit card PPI, claim the over is frequently overpriced and goes not offer good customer value for money. There is also evidence the cover has been mis-sold across the financial world.
The cost of credit card PPI, such as MBNA payment protection, is around 79p per £100 outstanding on a customer’s balance. The cover is applied on a monthly basis. If, as an example, a customer owes £4,500 on their credit card they may pay around £35.55 per month for the cover. If the balance remained constant for twelve months this would cost the customer around £426.60 for the year.
Many people feel credit card PPI, such as MBNA payment protection, can provide them with a valuable form of protection. The issue is that the cover is not always as comprehensive as customers think and the payout rate for this kind of insurance can be very low. In 2008 an investigation by The Competition Commission found that as little as 11% of customers who attempted to use their credit card payment protection cover were successful in doing so. This means, in effect, that almost 90% of customers who try to use their credit card PPI may be unsuccessful. It also means that credit card PPI can be incredibly profitable for lenders.
The other major issue surround MBNA payment protection cover and similar policies sold by other banks and credit card companies is the fact the cover has frequently been mis-sold. The issue of mis sold PPI was first brought to the attention of consumers back in 2006 when The Financial Services Authority and The Office of Fair Trading investigated the way in which the policies were being sold. They discovered widespread issues throughout the financial world and, as a consequence, many customers have made complaints and received PPI refunds.
Payment protection cover can be sold in a variety of different ways, but most instances can be divided roughly into two categories. Either the customer was given incorrect information or they were sold a policy that was not suitable for them.
Examples of where a customer has received incorrect information include a customer being told the payment protection cover was compulsory or would improve their chance of being given credit. This category can also include incomplete information if, for example, a customer is sold a policy without being made fully aware of the costs or terms and conditions.
The other significant form of mis-selling relates to the sale of policies to customers who are, quite simply unsuitable for the cover. This may be because they are ineligible for the cover, e.g. customers over the age of 65, or it may be because they have limited use for the insurance, e.g. if they have cover in place elsewhere. To find out more call 0207 471 2000.
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