The Ins and Outs of Payment Protection Insurance

There can be no denying it, PPI (Payment Protection Insurance) has been mis-sold each and every day to thousands of UK consumers. Not always intentional in every case, this is still a very important matter that now needs delicate handling – we are after all talking about people’s hard earned money, and as much as you can keep for yourself, especially in these hard economic times, is a bonus.

And this ‘infamous’ hidden fee that most people didn’t even know they were paying, Payment Protection Insurance, has been hitting the headlines of late. And while the true amount of PPI loss will never be fully known, even the more conservative estimations put the average PPI Claims from individuals at £2,750.

And in 2011 the FSA put the amount of money paid in compensation by banks at £1.9 billion, with the final bill likely to reach as much as £8 billion. And that’s just an estimated amount!

So here are a couple of instances where PPI can be mis-sold to you and how to ensure you are not mis-sold to in future.

You opened a store card credit card account in a hurry
One of the most popular ways for retailers to get more and more customers into their shops and spending money on a charge card is to bundle offers with a discount – and these initial savings are often pretty considerable. What you may not know is that there is another hidden rider in this bundle – one that isn’t quite as beneficial to you the consumer. Without even knowing it (and often times the clerk that helps you sign up is also in the dark) you may have inadvertently signed up for a Payment Protection Insurance fee every single month – even if you don’t use the card! Don’t trust store clerks who normally have minimum financial knowledge and training to be responsible for anything finance related, so make sure you ask before committing to anything. And if you’re unsure about anything then don’t sign on the dotted line.

Your loan’s terms and conditions out last the life of the PPI policy
Typically when you enter into a long term loan (anything over 5 years) you will be paying on the loan but not contributing a PPI fee anymore – which means that you may be under the impression that you are protected when you really aren’t. If this isn’t something that you and your loan officer or lender have covered in detail before you commited yourself to an agreement, you may also be a victim of mis-sold Payment Protection Insurance.


You may not be covered under the “standard” Payment Protection Insurance policy
There are a number of different reasons that you may not be covered by a PPI plan that you signed up for and not all of them are obvious or disclosed to you by less than ethical salesmen. For example there are plans that are void if you’re a student, unemployed, a part time worker or drawing a pension, as well as a myriad of other reasons.

Certain PPI Claims will be void because your status has changed from when you first signed up for the protection plan – for instance if you weren’t a student and now are one, or no longer have a full time job but you were recently employed. The details of the specific PPI coverage that you’re interested in purchasing and protecting yourself with needs to be full fully explained to you before you agree and sign anything at all.

How to protect yourself to make sure Payment Protection Insurance claims don’t go wrong
There are a couple of things you can do to make sure that you are as protected as possible when it comes to buying PPI insurance and that you avoid being mis-sold something. The first is to read your PPI agreement in full. This may be tedious and laborious work and you are most likely in a bit of a hurry when you’re in the process of buying a product, but you need to disengage from the “buying fever” and make sure you commit only to things you fully understand.

Make sure the person selling you the PPI asks all of the right questions. Even if you aren’t aware of all the information they should be asking e.g. medical history, employment status, etc., you should ask if there is any more information they need from you at the end of the interview. If they brush it off and mention a few details that they’ll input themselves to complete your application, then stop immediately and make sure you know what they’re talking about. Or just walk away if you don’t get satisfactory explanations to your questions.

Remember, once you commit to that agreement with your signature it’s a binding contract, one that you’ll be responsible for. Make sure you’ve not been missold PPI before you sign on the dotted line, or you can rest assured there will be trouble if you have to claim at some stage in the future.