Insurance

PPI or Payment Insurance Plan as we all know helps consumers to cover their dues, when they are unable to work due to unforeseen circumstances like illnesses, accidents or job loss. The bank would cover you for a period of one year. After the stipulated period you need to find other sources to pay back. The longer the payout the higher is the premium.

Besides this a claimant has to wait for around 120 days before making a claim, which means he hasn't paid his debts for four months before actually being able to claim. By that period he would have found a new job. For those wanting a shorter waiting period are required to pay steep premiums. The rates of these premiums can be reviewed, which means if the insurer finds that unemployment rates have risen sharply, he may come back and demand a higher premium. There are so many loopholes in the policy that its now part of a major scandal where banks have ripped off enormous amounts of money from hapless and ignorant consumer either by missell or misinformation.

Cases of missell include instances where the buyer is not informed that he is free to make his choice and need not necessarily buy the PPI from the bank. There are so many instances where people have been told that buying a PPI is probably the only way to ensure that the bank approves the loan. Also there are so many factors that make the claimant not eligible for claims. For example people with pre existing medical conditions, people with inconsistent, insubstantial and variable income and people who receive full sick pay when absent from work, may find their claims refused. Financial Advisors often don't ask people about these conditions before selling the PPI. A claims company helps out with PPI claims. But the problem with them is that they charge a settlement fee of 25-40% on successful PPI reclaims. You could seek help from the FSA or the Financial Services Authority, the Financial Ombudsman, which helps you to win your claim.

Once you've identified that you've been missold a PPI, the next step is to make a claim to the bank (and not the insurer) stating reasons for the missell. Regulations made by the FSA, has now forced banks and financial lenders to take into account legitimate claims. In cases where the banks refuse to consider your plea, you could obtain a letter of deadlock from the bank and file for compensation to the FSA.