PPI Sale Restriction Plans Set To Save Consumers Money
PPI Sale Restriction Plans Set To Save Consumers Money
New legislation put in place by the Competition Commission will restrict the sale of Payment Protection Insurance (PPI) at the point of obtaining finance. The ruling will be bad news to High Street banks, who are set to lose an important source of income, but a welcome move to consumers.
The ruling will see regulators from the Competition Commission restricting banks from selling PPI to customers at the time they borrow and for a fixed period, possibly 14 days, after.
The Competition Commission has reported currently 75% of all mortgage PPI policies are sold at the time of obtaining finance and that many borrowers are unaware Payment Protection Insurance is available from outlets other than the lender.
The new legislation will mean more consumers saving money, as they realise they have the opportunity to shop around when it comes to purchasing PPI.
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Fears that Payment Protection Insurance will no longer be considered
A report by consumer money comparison website Moneynet has expressed fears that Payment Protection Insurance (PPI) will no longer be considered by customers obtaining finance.
Mis-sold policies
PPI has a tarnished reputation due to a large number of policies previously being mis-sold. Many customers are now apprehensive about purchasing this insurance. There is a danger that if lenders become prohibited from selling PPI cover at the point of sale, many customers won’t even consider this insurance.
PPI is still ideal for some
Despite its tarnished reputation, PPI is still a valuable safety net for those who need it, covering borrower’s monthly payments if they are unable to work due to being made redundant, falling ill or having an accident; Payment Protection Insurance is still an ideal product to consider.
People should still protect financial commitments
With warnings given by David Cameron for painful and unavoidable cuts to reduce the UK budget deficit, there will be fears that jobs may go. PPI is not an ideal product for everyone, but with fears of redundancies, it can be a good way for people without other insurance cover to protect their financial commitments.
Do you qualify to claim PPI payments back?
If you have taken out a mortgage, loan, credit card or have obtained finance on any high value item in the last 10 years, there is a good chance you have a Payment Protection Insurance (PPI) policy. But did you know you had taken out a PPI policy? The Financial Services Authority (FSA) have launched a major crackdown on financial providers after finding millions of PPI policies over the past 10 years have been mis-sold to customers. You could have Payment Protection Insurance and not even know it!
Why would have payment protection insurance been miss-sold though? Research shows that banks and other financial providers encouraged sales employees to sell PPI policies by providing greater bonuses and other incentives. So often PPI was sold alongside mortgages, loans and credit cards by any means necessary, even if it meant ruthless tactics and misleading customers.
Some of the common sales tactics for selling PPI include:
- You didn’t ask for a PPI policy but it was sold to you anyway, without the cost being stated at the point of sale.
- Informing you payment protection insurance was compulsory or that purchasing it would improve your chances of getting a loan.
- Not being told PPI is optional or that a cheaper policy could be purchased elsewhere.
- Not asking you if you already have alternative payment protection cover, such as income protection, employer illness cover or a redundancy package.
- Not being informed the PPI policy is limited and will not cover the entire duration of your loan term.
Shockingly, the FSA have found that some customers seeking finance have been sold PPI even though they would never be eligible to make a claim.
Typical cases where you would not be eligible to make a valid claim on a PPI policy include:
- If you were unemployed or retired at the time of the insurance policy being taken out.
- If you are self-employed.
- If you were employed on a temporary or contract basis or worked less than 16 hours a week.
- Many policies have an upper age limit, usually 65 or 70, if you were older than this age at the time of being sold the policy, you would never be eligible to claim.
- If at the time of being sold the policy, you had a medical condition or an existing illness that could stop you from being able to work.
If you believe you have been the victim of ruthless sales techniques or fall into any of the unfortunate categories where you would not even be eligible to claim, there is good news, you do qualify to claim PPI payments back.
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