Millions of People Sold useless Payment Protection Insurance
Article published on 29th May 2008
A shocking report due to be published in June will reveal that around 2 million people in the UK have been sold payment protection insurance (PPI) policies that are potentially worthless. As discussed in previous articles, this sort of insurance covers monthly expenses that may not be able to be met due to unforeseen circumstances relating to the policy-holder's financial situation.
Apparently, 6 million people over the last 5 years have purchased payment protection insurance, but the Office of Fair Trading, the Competition Commission and Which? Have all stated that they have uncovered evidence of mis-selling on a massive scale. Indeed, Doug Taylor of the consumer group Which? Said that although they had been aware that this sort of mis-selling went on, they'd had little idea how prolific it was or how much money was involved in it.
For example, many pensioners who do not have any income have been sold PPI the insurance despite the fact that they have no income to protect and so would never be able to claim on their policy. Figures reveal that both banks and retail companies, particularly those selling car finance, furniture and store cards, have been making upwards of £5.5 billion a year from such policies.
Most experts claim that the confusion (or obfuscation) that makes it difficult or impossible for customers to make claims on their policies comes about through confusing small print. No surprises there. The good news is that companies that are found guilty of mis-selling PPIs will be slapped with huge fines from the Financial Services Authority.
Payment protection insurances are not in themselves a bad bet. Just be sure to shop around for quotes and offers, and always, always read the small print before signing any contracts - in fact if you are still unsure, ask your solicitor or more legally minded friends to take a look too, for full peace of mind.
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