Banks, financial institutions and lenders have stepped up criticism of claims management companies for promoting false claims. Banks complain that they often get cases where individuals never purchased PPI policies from them and yet filed claims demanding compensation.
More and more people are worried about payment protection insurance and this is evident from the fact that banks are receiving close to 12,000 complaints on a daily basis. This is a conclusion that can be drawn from information relating to July to December 2011. During this period, the number of complaints relating to loan insurance rose by 21% as compared to the first half. 85% of all complaints received were relating to payment protection insurance. People complaining to the Financial Services Authority about savings and current accounts no longer constitute a significant percentage of the total complaints.
The extent of misselling of payment protection insurance is evident from the fact that banks had to pay out £2.1bn to customers as compensation for missold policies in the second half of 2011. This meant that a policy that was very popular amongst borrowers no longer enjoyed their support. People preferred PPI policies because it helped them take care of repayments even when they lost their jobs or fell ill. However, misselling complicated the process and banks ended up paying billions of pounds as compensation to customers. The number of cases and claims being filed has compelled the Financial Services Authority to extend the original deadline of eight weeks for settlement of claims.
Consumer Groups- Misselling Widespread
Richard Lloyd, chief executive of consumer group Which?, said that the large number of complaints relating to PPI misselling is a clear indication of how common this problem was. He called upon the FSA to take strict action against institutions that were trying to slow the process of settlement of claims. Considering the fact that Barclays received more than 250,000 in the first half of 2011 and more than 280,000 claims in the second half, fears that customers may end up waiting for a long time for their money are genuine. Lloyds Banking Group has received the largest number of complaints amongst banking groups while Barclays has received the largest number of complaints per brand.
You have the right to recover money paid on a payment protection insurance policy if it was sold to you as a compulsory or mandatory option. If you were not given the freedom to reject the product altogether, then you can recover the money that you have paid till date. There are certain documents that must be collected and analyzed before the policy can be activated. Was your employment history checked? What about your medical history? These factors have a huge impact on the terms and conditions of the policy. If these points were not analyzed, then chances are high that you will not enjoy any benefit whatsoever. The best option is to take a look at any and every credit related transaction that you have finalized in the past 10 years. Check whether you are paying money towards payment protection insurance on these products. If yes, then you should not hesitate to take steps to recover the money.
The lender may not have informed you that you will be paying for PPI. Yet, you can determine this payment by analyzing the statement provided by the lender. In some cases, the cost of PPI can constitute up to 40% of the total amount payable. Avoiding this payment can help you save a lot of money in the long run.
To recover money that you paid on missold PPI is your legal right. Do not be afraid that lenders may retaliate against you and make changes to the loan agreement. You cannot be punished or troubled in any other manner for exercising your legal right. Hence, proceed ahead without any fear as long as you can prove that the lender is at fault.
Dealing directly with the bank is an option but this can be a pedantic, cumbersome and troublesome affair. You will have to complete many formalities and procedures. You will have to devote a lot of time and effort to this task. The Financial Services Authority has imposed a deadline of 8 to 12 weeks for such claims. You will have to follow up on a regular basis to recover the money and ensure that you save money in the future as well.
If personal intervention is not feasible, then you can delegate the task to company that specializes in these claims. The company shall complete all the formalities on your behalf. In return, they will charge a small fee from the final payment you receive from the lender. If you lose the claim, then you will not have to pay anything to the company.
Stuart King made it very clear that the market can no longer be allowed to operate as it has operated in the past.Steps are being taken including the implementation of standards that will govern the sale of payment protection insurance. It is also a question of increasing the level of awareness amongst consumers. The Financial Services Authority is also taking steps to govern the strategies and marketing tactics used by sellers to attract customers for payment protection insurance. These measures combined with the existing legal mechanisms available for recovery the money should be enough to undo the damage caused by lenders on the payment protection insurance market.
Is the controversy surrounding payment protection insurance mis-selling real or is it just media hype? Well, the financial services authorities are of the opinion that this problem is a serious one and has affected a large number of individuals who have obtained loans. Lenders have been accused of misguiding customers and convincing them to go in for this policy without any justification.. Other mal practices have resulted in huge profits for lenders. The problem is widespread and has affected a large number of individuals who would have saved a lot of money had they not gone in for payment protection insurance.
There is authentic and clear information that lenders have practiced fraudulent practices to earn more profit by mis-selling payment protection insurance policies. According to Stuart King, who is the head of Market Intelligence of the Financial Services Authority, many dozen firms have been involved in the mis-selling practice. This is not a small number. Considering the reach of these financial institutions, there is a significant possibility of large number of individuals being affected by the mis-selling practices. Further, the manipulation of the PPI claims market has been going on for quite a long time now. The source of information is impeccable and there is no scope for rejecting it without providing adequate proof. In any case, the Financial Services Authority is not known for making such statements without adequate proof.