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Yorkshire Bank Payment Protection

Mis sold PPI has repeatedly made the headlines in recent years as the number of unhappy customers registering complaints continues to grow. If you have a payment protection policy, but are unsure whether you might be entitled to make a claim our guide may be of some help.

What is PPI?

PPI is short for payment protection insurance and it is a type of cover sold with loans, credit cards and mortgages. The cover is supposed to protect the borrower if they cannot work due to sickness, accident or involuntary unemployment, but it has been heavily criticised.

What was the issue with payment protection cover?

There are several issues with Yorkshire bank payment protection cover and similar cover sold by other lenders that have been highlighted over a number of years. The first issue is regarding the cost of the cover.

On a loan or mortgage, payment protection cover is usually charged at a rate of between 13%-25% of the loan value. On a loan of £5,000 this could add between £650 and £1,250. The cost of the PPI will also attract interest at the same rate as the loan itself meaning it could significantly increase the overall debt.

Yorkshire Bank payment protection cover charged on credit cards is, as with other lenders, applied on a monthly basis depending on the customer’s outstanding balance. The average amount applied by lenders is around 79p per £100 outstanding. On a balance of £5,000 this would amount to £39.50 per month

The next issue with payment protection cover is the low level of coverage it often provides. A 2008 Competition Commission found that just 15% of customers who tried to use their loan PPI policy were successful. For credit card PPI the figure was just 11%.

The last, and possibly the most important, issue concerning payment protection insurance relates to the sale of the cover. Investigations by The Office of Fair Trading and The Financial Services Authority found serious failings with the way many lenders had sold the cover. In many cases it was found customers had been given inadequate or inaccurate information. Others were sold policies that were unsuitable for them or that they would be ineligible to use.

The cause of the PPI mis-selling scandal is difficult to pinpoint. Many people have pointed to a lack of staff training and a failure to implement processes to protect customers from the threat of being mis-sold an unsuitable policy. Other critics claim the huge profits involved in the sale of the cover and the high rates of commission offered to sales staff lead to an unfair culture sales culture and a ‘sell at all costs’ mentality.

Who can make payment protection claims?

If you believe you were mis-sold a Yorkshire Bank payment protection policy or a similar cover by another lender can have the right to make a complaint. For more information on the claims process, call a member of our team on 0207 471 2000.

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