Many consumers have been told of the controversy surrounding Payment Protection Insurance (PPI) but scores of citizens in the UK are still uninformed of the discrepancies and sham involved in this type of loan insurance.
A lot of people who took out loans that incorporated PPIs had no other alternative but to agree to it due to the fact that they were led to believe that it’s required or have to take out the PPI or else they won’t be granted the loan. PPIs are included to any kind of secured or unsecured loan such as credit cards, personal loans and mortgage and a PPI’s main idea is to help borrowers who unexpectedly come across the misfortune of unemployment or serious illness.
UK credit card holders who have taken out PPI is estimated to be around 9.8 million. About 13% of these customers thought that PPI are mandatory or the notion that the insurance would give them some sort of leverage to the lender.
Payment Protection Insurance on credit cards has an annual revenue of almost £1 billion. Ethical business practices have been a rare quality among several financial institutions and it’s no surprise if selling of PPI is still frequent given this kind of revenue. Given that millions of consumers are paying for PPI which already gather in lots of extra revenue to banks and other financial institutions, the most disturbing of all is that people who attempt to carry out PPI claims are being denied or ignored.
Some studies that were conducted show that only 11% of PPI claims were successful so only 1 in 10 claimers get their PPI compensation. Lots of people who were denied PPI compensation are often denied because of their manner of employment or age. Then again, lenders should inform borrowers of these aspects earlier.
Anyone trying to acquire a loan should not be forced to get PPI as it is non-compulsory. PPI coverage and exclusions should also be explained thoroughly to customers. Exclusions include those who are self employed and those who are and more than 65 years of age. Further important facts such as single payment for the insurance, interest rate, and paying interest even if the PPI expires should be revealed and made clear to loan applicants from the very start.
If the lender neglects to notify new clients who fall in this categories about this policy, but still pushed the PPI to the borrower, it’s considered as mis-sold PPI insurance.
Financial experts and consumer advocacy groups are criticizing PPI and those that provide them and essentially say that PPI is a downright rip-off which is comparable to selling snake oil. With the economic downturn still affecting millions of Brits, the last thing everyone need is to get an added hole in their pockets and PPI should only be set aside to those who would like it and those who have a clear awareness of it.
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