One in three with PPI may find it worthlessLoan cover exclusions make it useless for many

28 May 2008

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A third of consumers who have taken out payment protection insurance (PPI) in the last five years may never be able to make a claim, Which? warns today.

They may fall foul of at least one ‘significant exclusion’ that would prevent them from making a successful claim.

PPI is sold alongside loans, credit cards, finance agreements and mortgages to cover repayments if people are off work because of illness or unemployment.

But we estimate that as many as 2 million policies have been sold to consumers who may not be eligible for cover,

Exclusions

For example, people who are self-employed or on a fixed-term job contract often aren't covered by PPI.

Many people aged 65 and over, or people who might claim for absences relating to pre-existing medical conditions also may not be covered.

We estimate that around 6 million PPI policies - about a third of the market - were attached to loans at the end of 2006.

Compensation

Which? personal finance campaigner Doug Taylor said: ‘We've always known that people were being mis-sold PPI, but we were still amazed to discover the scale of it.

‘It appears that salespeople are chasing their commissions, their bosses are chasing profits - where's the sense of responsibility to the customer? 

‘If you have a loan and think you might have been mis-sold PPI, now's the time to fight back. Compensation could be just a letter away.’

Checklist

If you are unsure whether you have been mis-sold PPI, follow this simple checklist. If you can answer ‘no’ to one or more of these questions, then you may have been mis-sold:

  • did the adviser make it clear that the insurance was optional (if this was the case)?
  • did the adviser tell you about the ‘significant exclusions’ under the policy? For example, the exclusion that states you won’t be covered for any pre-existing medical condition?
  • if you took out a loan or finance agreement, did the adviser make it clear that you would have to pay for the insurance up front in a single payment?
  • if you had to pay for the insurance as a single premium, did the adviser make it clear that the insurance cost would be added to the loan and you would be paying interest on it?
  • if your PPI policy expires before your loan or finance agreement does, you'll be paying interest on insurance that is no longer in force.  Did the adviser make this clear?

For more information on how to make a complaint and begin the process of claiming back your PPI, visit our payment protection insurance campaign