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Payment Protection Legislation

In 2006 the Financial Service Authority and the Office of Fair Trading investigated the sale of payment protection insurance. Their investigations revealed significant issues with the way the cover was being sold and, as a result, some lenders faced significant fine. The investigations, and subsequent, fines heightened public awareness of the issue of mis-selling and there was a significant increase in the number of customers making a  payment protection claim. Although there is no specific payment protection legislation there is very clear Financial Service Authority guidelines regarding how the cover must be sold and, if a lender fails in some aspect of this process, the customer has the right to make a complaint.

Types of mis-selling

Mis-selling can be placed into roughly two categories either the customer was sold a policy unsuitable for their needs or they were given information that was misleading or incorrect.

The customer was sold a policy unsuitable for their needs

There are several key reasons why a payment protection insurance policy may be unsuitable for a customer. In the most severe cases a policyholder may actually be ineligible for cover, for example because they have a pre-existing medical condition or are aged over sixty-five and their particular policy does not cover these circumstances. Where a customer is ineligible to use a policy this is a clear case of mis-selling Customers may also be able to make a claim if they were sold a policy that was not suitable for their circumstances at the time of sale, for example if they were unemployed or in full time education or had cover in place elsewhere - in these instances the cover could only be of limited use and should not have been sold.

The customer was giving misleading or incorrect information

Because of a lack of training or a desire to increase sales, many sales people gave customers information that later proved to be incomplete or inaccurate. Common examples include customers being told the cover was compulsory or a failure to fully explain policy conditions. This may be regarded as mis-selling as the customer's decision to take up the cover was based on misleading or incorrect information.

To find out more about payment protection legislation or you would like help starting your claim call: 0207 471 2000

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