With an
increasing trend in use of consumer loans, purchase of Payment Protection
Insurance (PPI) is also increasing. Although, this insurance is supposed to
provide relief to the consumers it gives rise to some problems as well. One of
the problems arises when a claim on PPI is turned down i.e. after buying a
protection policy when the consumer claims its payment the issuer company of
the insurance refuses to pay it back. Another problem is of mis sold PPI, which mainly is our
concern here. In the past few years immense amount of complaints were made
against the lenders, and so to assist these people in making PPI claims many PPI claim companies
came into being.
Payment Protection Insurance (PPI):
What
happens if you take a loan and due to some reasons it becomes impossible for
you to pay it back? This was the question that the makers of PPI policy had in
mind. PPI is something that can be purchased to assure payments of any kind of
consumer loans in case a borrower is unable to work, it may include circumstance,
such as, where the borrower becomes ill or handicapped or dies. The issuers of
these PPI are usually banks or insurance companies. PPI are usually purchased
when a loan or mortgage is taken but that’s not necessary, sometimes they are
also acquired independently. In UK, PPI are also given other names such as loan protection, loan insurance and so on.
Mis Sold PPI:
The policy
was apparently prepared to advantage the borrowers; this new creation was
introduced as a smart option for the customer. But things did not work as
smoothly for the borrowers, as they were perceived to be. Instead, they turned
out to be in favor of lenders and the insurance companies or banks. The lenders
used some tricks to mis sell these PPI. In some cases, when you took a loan
they made acquisition of PPI mandatory. Sometimes, the buyers were not given
proper information when they could have ended up buying cheaper PPI. Most of
the times, the buyers were unaware of the fact that PPI is being added to the
policy.