Payment Protection Insurance (PPI) is an insurance, which can be attached to loans, mortgages and the like and ensures that if you cannot work for some reason, or if you are made redundant, then your repayments are still made. However, many PPI policies have been mis-sold resulting in individuals paying for PPI when they cannot actually claim on the insurance or feeling pressured into purchasing it unnecessarily.
The PPI scandal has occurred because individuals were sold PPI when they would have been financially better off without it. In 2005 the FSA put PPI review as a top priority and after conducting research found out the there were poor selling techniques in practice. In 2006 firms began to be fined for mis-selling PPI, there were constant debates surrounding the control of PPI and in 2011 there was a high court case that ruled against the banks thus resulting in thousands of PPI claims being re-opened. It has introduced new regulations in the dealings of complaints, meaning that consumers are treated fairly. This has resulted in an enormous amount of PPI complaints being made.
Banks are setting aside billions of pounds each to prepare for the compensation costs they will have to pay out, and this number is believed to exponentially increase given the 2011 ruling. Many banks will not know the final cost of the PPI scandal until next year, until then they are sectioning sums of money to be dedicated towards compensation. It is estimated that between 2000 and 2012 there were 604,550 PPI claims made, and approximately 62 per cent of this are being upheld in the consumers favour. With such a large number of PPI claims, it is not surprising that banks are seeing their compensation bills increase dramatically.
The PPI scandal is set to top £13 billion in compensation for those mis-sold PPI and is therefore becoming the worst financial scandal in British history, topping the pension mis-selling scandal by approximately £2 billion. There are concerns that due to the huge compensation bill, the banks will run out of money in their compensation pots.
For advice and assistance with reclaiming mis sold ppi, contact the PPI Claims Specialists at www.PPIClaimsCo.co.