Payment Protection Insurance (PPI) “No Win No Fee” is a phrase that we have grown to know over recent years following the explosion of PPI complaints that have taken place following a review and court hearing regarding the mis-sale of PPI by large Banks and Financial Institutions throughout the 1980s, 1990s and 2000s. This review took place following a “super complaint” in 2006 by the Citizens Advice Bureau. The Financial Services Authority (as they were then known) now known as the Financial Conduct Authority (FCA) undertook a review of the sales process undertaken by the large lenders into their way of selling Payment Protection Insurance.
Following this considerably lengthy review, it was found that the Banks had mis-sold the PPI. Therefore a legal action began in which the Banks were challenged and (whilst initially the Lenders and Banks did defend their position) they soon agreed to review cases which were forwarded to them in relation to clients’ PPI that had been inappropriately sold in the years prior to this. Also, the Lenders stopped selling PPI, both for single premiums and monthly premiums on the majority of products, although some Lenders still kept the product going, but on a basis which complied with the various sales processes that should have occurred originally.
PPI is an insurance that secures borrowing in the event of accident, unemployment or death. It was used widely over the past 30 years in order to boost Banks’ profits. The premiums themselves could be in two formats, either as a lump sum, or on a monthly basis. The monthly sums would reflect the amount of borrowing, and length of time that the borrowing was over. It could run into approximately a quarter of the original finance. This would of course be added onto the loan facility. Over a period of time interest would also be charged upon this, further inflating what was already a loan facility that the client had to pay interest into, but also an extreme way of borrowing money – with Lenders themselves making twice as much back than they originally lent in the first place!
The monthly PPI premiums were taken mainly on credit cards, but also on other facilities such as mortgages or other facilities which required a slightly different tact from the lenders. In relation to credit cards, for instance, they reflected the amount of borrowing on a monthly basis that the client had, and were charged in tranches per £100. Again, this could be quite a costly fee and the lenders got away with this by introducing it onto their credit card statement in a position where most people (in fairness) with credit cards just ignored. The credit card statement itself is designed to only interest consumers in one way, and that is the final balance. The transactions which occur above it are almost irrelevant.
Up until the end of 2015 the refunds in relation to the mis-sale of PPI have almost reached £30billion. There is now going to be a deadline for submission of these complaints, which is likely to be around spring 2018. Therefore it is likely that this overall figure will increase to over £40billion, or even £50billion by the time all claims have been processed. If you have not looked at your PPI, or facilities that you have had in the past (whether open or closed) it is essential that you do so, regardless of the information that you have, as it can be established whether PPI has been applied or not.