Lifestyle protection; payment break plan; accident, sickness and unemployment cover; Lifechoices; and Payment Cover - these are just a few of the many other names by which PPI is known.
PPI stands for Payment Protection Insurance and it is a type of insurance cover designed to provide a financial safety-net for borrowers. Sold, for more than 30 years, alongside mortgages, loans and credit cards it is supposed to step in and take over debt repayments if the policyholder cannot work due to accident, sickness or unemployment. The problem with PPI is it is very expensive and can offer very little in the way of real protection. The cover has also been widely mis-sold and has hit the headlines on numerous occasions for all the wrong reasons. As a consequence, many people have been left angry and frustrated and have sought to recover PPI.
Although PPI is a long established product its reputation has been badly tarnished by controversy. Below we take a look at the timeline of the PPI scandal.
1998 Which? magazine expresses concern regarding the high costs and exclusions associated with PPI policies.
1998-2005 A number of UK newspapers write exposes regarding the PPI market.
September 2005 The Citizens Advice Bureau (CAB) issues a 'super complaint' regarding PPI and the way in which it is sold. The CAB dubs the PPI industry 'the country's biggest protection racket.'
October 2005 In response to the CAB complaint and subsequent media coverage, there is a rise in the number of people trying to recover PPI.
November 2005 The Financial Services Authority (FSA) publishes a provisional report regarding the sale of PPI using information gathered through mystery shopping exercises. It reveals concerns regarding poor selling techniques and a lack of compliance processes.
September/ October 2006 The FSA fines a number of smaller companies for mis-selling PPI. It also issues a further report containing evidence of more compliance issues. As a result, many people mis-sold PPI by these companies start to make claims to recover PPI.
October 2006 The Office of Fair Trading (OFT) issues its own report and announces it will refer the mis-selling issue to The Competition Commission.
January-February 2007 The FSA fines some of the larger lenders guilty of mis-selling. Those fined include:
- Alliance and Leicester (fined £7 million)
- Capital One (fined £175,000)
- Egg (fined £721,000)
- GE Capital - provider of storecards including: Topshop, Debenhams and Asda (fined £610,000)
- HFC Bank, also trading as 'Household bank' and 'Beneficial Finance' (fined £1,085,000)
- Liverpool Victoria (fined £840,000)
The high profile nature of some of the lenders fined led to a surge in press interest. This, in turn, led to an uplift in the amount of unhappy customers seeking to recover PPI.
January 2008 The Competition Commission issues a report on the sale of PPI.
April 2008 The Competition Commission issues two further reports highlighting issues with PPI and its sale.
May 2008 Which? publishes research into PPI sold with loans. It claims as many as £2 million people have been sold policies they are unable to make a claim against.
September 2008 Which? publishes a further report regarding the sale of PPI with credit cards. Their research shows up to 1.3 million people took out PPI believing it would improve their chances of being approved for credit. The Which? report draws attention to the failings of many lenders and an increased number of unhappy customers begin to recover PPI mis-sold with their credit card.
May 2009 The FSA bans the notorious single-premium PPI policy. This type of cover has previously attracted a great deal of criticism as it is expensive and often does not cover the policyholder for the whole life of the loan.
September 2009 The FSA announces it intends to take tough measures to protect customers of mis-selling by introducing new guidelines.
October 2010 The British Banking Association (BBA) requests a judicial review of the new FSA guidelines.
April 2011 The High Court completes its review of the case and finds in favour of the FSA.
May 2011 The BBA announces it will not challenge the court's decision.
May 2011 Several of the country's largest banks announce the provision of funds to deal with the PPI issue including:
- Lloyds £3.2 billion
- Barclays £1 billion
- RBS £850 million
- HSBC £270 million
- Co-op £90 million
If you would like to recover PPI mis-sold on a mortgage, loan, hire purchase agreement, store or credit card then we can help. Fill out our claim form above or call us today on 0207 471 2000.
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