March 6, 2011

Loan Protection Insurance Refunds

Loan Protection Insurance RefundsOver the past few years if there one thing that has dominated the personal finance headlines it has to be the misselling of payment protection insurance (PPI)

In fact the whole issue has become so widespread that now nearly half the cases dealt with by the Financial Ombudsman Service are to do with PPI. The service dealt with 50,378 new consumer complaints in the three months to December 2010 and 24,955 were related to PPI.

The idea of PPI actually isn't a bad one it is designed to cover debt repayments when a person loses their job or falls ill. However, a lot of customers were sold the product when it wasn't right for them. This means that the insurance was essentially invalid so if people had to make a claim they wouldn't be entitled to any money back.

Often consumers were told that PPI was compulsory when they were being sold loans or credit cards when it is an entirely voluntary product. While, a lot of people who were self-employed or who had existing medical conditions were also sold the insurance which meant they weren't covered in the event of unemployment or illness.

Now after investigations by the Office of Fair Trading, Competition Commission and the Financial Service Authority the way financial service providers sell PPI is far more regulated. This also means that if you think you have been missold PPI you can claim back the cost of the insurance.

If the firm who sold you the PPI or the Financial Ombudsman Service decide that you have been missold the policy then you should get back all the premiums you have paid, with interest added at eight per cent.

The first thing to do if you think you have been missold PPI is to cancel the policy. Then the next step is to complain to the company who missold you the policy - there are lots of companies and sites who can help you with this.

However, don't be put off if the firm rejects your claim by saying you weren't missold PPI. At first many firms swear blind that the policy was correctly sold, however, when asked to produce evidence of this they later back down. This is often a tactic employed by banks and building societies who rely on the fact that a lot of customers will take their word for it and leave it there.

However, when the case is taken to the Financial Ombudsman Service the claim is often upheld in the customers favour. Even the Ombudsman has complained that some financial service providers have been deliberately rejecting claims when the Ombudsman upholds 90-100 per cent of them.

There is potentially a lot of money to be made from claiming back PPI and on loan insurance it could even run into thousands of pounds. Therefore, it is definitely worth investigating whether you have been missold a policy and if you think you have been to start the claims procedure. You'll certainly be no worse off than if you hadn't put in a claim.

The usual process for this involves enlisting a refund company. Once it is established that there is a case for compensation, a legal team working on behalf of the customer will try to reclaim the capital spent on the PPI, interest and any 'secret commissions' received by the seller of the PPI. Success rates tend to be very high, as are the potential sums of money which can be reclaimed from missold Payment Protection Insurance policies.

Vincent Rogers is a freelance writer who writes for a number of UK businesses. For help with Reclaiming Loan Protection Insurance, he recommends Randall and Vickers.

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