Payment Protection Insurance is a good insurance but has been misused. A lot of PPI policies have been mis-sold with mortgages, credit cards and loans.
PPI is a protection that a person takes if you are in a tight situation such as when you are sick or lose a job and cannot pay your loan. However if you are mis-sold a policy you will be having a PPI that you don’t need. When you discover that you have a policy that you don’t need the right thing for you is to claim it. You will get your money back plus some interest of your claim is accepted by the company.
This scandal started over two decade ago and still in place today. PPI claim have gained popularity after High Court ordered that all company who mis-sold PPI to their customers they must compensate them. At the moment companies have started compensating their customer and over £22 have been paid out. This habit of companies mis-selling PPI has not stopped and it may take time before it ends.
According to Caroline Wayman, the chief financial ombudsman has said that it may take years before this scandal is over. She says despite the current situation they are getting numerous complaints from credit card companies. They are getting about 4,000 complaints each week.
This rate however has reduced as they were recording thrice of this every week. Financial Ombudsman has dealt with over 1.25 million cases on PPI claims. It is expected that the number of people who have made their claim is high as other people directly claim their compensation from credit companies and banks.
The impact of PPI scandal
Ms Wayman says that the number of people complaining is decreasing but it will take before we can comfortably say that PPI mis-selling is over. Also she said that the number of complaints that were being sent to Financial Ombudsman is starting to stabilize.
This means that there is light at the end of the tunnel and this nightmare will end soon. Wayman says that in order to solve with this increasing number of complaints they had to recruit 200 more people to be ombudsmen and adjudicators.
So as handle these case Financial Ombudsman had to double the size of their staff to a total of 4,000 people. PPI claim have become popular in the recent years and hence they needed more staff to act on the cases.
How the companies started mis-selling PPI
PPI started in 1990s. People used this method if they were unable to pay their loan in case they were sick or had lost their job. This policy would help them to pay off any existing loan or mortgages. Bank and credit companies took advantage of this and started to mis-sell PPI policies to customers.
However many people were not aware that they were paying for the policies and they did not need it in the first place. That is why many people are claiming their money back.