Understanding PPI and missold PPI

A lot of people are confused about PPI and mis-sold PPI; this has resulted to confusion and unsuccessful compensation claims.

11:01 13 January 2013

Recent reports have confirmed that more and more people are now confused about PPI or Payment Protection Insurance and mis-sold PPI. Although the issue has been the topic in advertisements of claims management policies, a lot of people do not still fully understand what these are. This confusion has led to numerous unsuccessful compensation claims.

Payment Protection Insurance is offered with lending products such as catalogue credit purchases, mortgages, loans, and credit or store cards. This covers up to 12 months payment should the borrowers are unable to make payments due to sickness and other reasons.

PPI is a valuable type of insurance. However, several banks and lending companies made billions of pounds by misrepresenting to borrowers.

PPI is considered mis-sold when (1) it was added to the lending product without informing the borrower (2) when banks or lending companies made the borrower believed that PPI is not optional and that getting it can speed up the process of getting a loan (3) the terms and conditions were not fully explained to the borrower.

Also, (4) the borrower was unemployed or self-employed when they were sold PPI and (5) the borrower was medically exempted from the policy at the time of its sale.