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Payment Protection Insurance

If sold correctly, Payment Protection Insurance may be very useful to you as a consumer in this economic climate. In the unfortunate event that you may lose your job (through no fault of your own), having a Payment Protection Insurance policy may ease the financial burden by fully covering or covering a percentage of your mortgage, Higher Purchase Finance and credit card repayments. If you are experiencing financial strain due to:

Bournes strongly recommend that you check any loan agreement(s) for the inclusion of Payment Protection Insurance in the policy. It may prove advantageous and offer some form of cover. However it may not. It has come to light through our in- depth examination of credit agreements, in more cases than not, this type of insurance has been mis-sold on a routine basis by our country’s most respected financial institutions.

There serious doubt over the validity of such policies. A harrowing thought if you are like one of the many consumers who have taken out a Payment Protection Insurance policy. The Citizens Advice Bureau (CAB) evidence report on ‘Bridging the Financial Literacy Divide’ reported concerns eight years ago regarding the value of some payment protection insurance and poor sales practices experienced by consumers. The report of the Department of Trade and Industry DTI Overindebtedness Task highlights that some payment protection insurance has been sold to consumers who have failed to understand the product or appreciate that it is an optional add on to the principal loan agreement. Even more damaging, these insurance policies have been sold to consumers who do not satisfy the qualifying criteria. i.e.:

Most creditors failed to explain that interest is often charged on the insurance premiums. Policies are often riddled with exclusions i.e. self-employed individuals, those working on a contract or on a part-time basis would not be eligible to claim the Payment Protection Insurance (PPI) they has paid for. More often than not financial institutions refuse to pay out when we most need them to.

Unsurprisingly consumers are not happy about this and the Financial Ombudsman Service is taking action. The Telegraph reports that 99% of general insurance complaints made about Egg, Black Horse (the loan division of Lloyds TSB), MBNA Europe and FirstPlus Financial (part of Barclays Bank) were upheld in favour of the consumer. Recent figures published by financial Ombudsmen Service show that the arbitrator rules in favour of the customer in nine out of ten complain regarding this controversial insurance product. A welcomed decision.

It is hard not to take a pessimistic line when some of the largest financial institutions abuse the trust of its customers. It is there moral and legal obligation to act in the best interest of the customers that they represent.

At Bournes we do just this. In the likely event you were sold payment protection insurance with a loan please contact us. There is a high possibility that your loan agreement may be rendered unenforceable due to the mis-selling of this product.

It is time that consumers have protection against the abusive practices of the financial sector. Neglect of this area on their part is unacceptable in an economy where consumer credit is taking an ever increasing role. Exploiting the good nature of individuals who believe they are acting in the best interest of themselves and their families by paying for an extra insurance policy is unacceptable. We intend to act by examining these agreements for you and challenging where possible.