We’ve all seen the ads, heard them on the radio, had many many phonecalls about it, but what’s it all about and how many people have actually been mis-sold PPI?
Payment Protection Insurance is designed to cover costs of payments such as credit card payments, store card payments, loans and mortgages, in such events that prevent the person who owes the payment from making the payment, such as redundancy, illness, accident or death. Presented as a useful utility for the purposes of debt management, the scandal that ensued resulted from unfair and illegal practices being used to sell PPI to unwitting customers, in some cases people didn’t even meet the criteria to be eligible for PPI pay-out and, in others, weren’t even aware of being sold PPI.
In a 1998 article appearing in Which? Magazine, questions were first posed at the value and worth of PPI as a product. Between the years 1998 and 2005, various newspapers took PPI to task. Questions were raised as to the increased cost to loans added by PPI, the ineffectiveness of PPI structure, the nature in which PPI was (mis-)sold to customers and the inefficient nature in which claimants struggled to complete claim procedures. In September 2005, Citizens Advice published its Protection Racket report and lodged a “Super Complaint” with the Office of Fair Trading concerning PPI sales. The following month, the Financial Services Authority (FSA) issued its first report on PPI, discovering mis-selling and failure to comply with policy during undercover investigations. As smaller firms’ culpability came to the fore, investigations continued into the practices and PPI deals offered by the bigger banks. It took some time for the broader picture to emerge. Which? magazine led the charge publishing findings that up to 3 million people had bought PPI under false pretences, in 1998. In January 2011 the High Court launched a case against the banks, culminating in a ruling against them in April 2011.