Compensation could be on the cards for PPI clients

Compensation could be on the cards for PPI clients

Lately, Payment Protection Insurance (PPI) has been a prominent feature in the news – and it has not always been positive coverage.

PPI provides a monthly sum over a set period of time (normally 12 months) if you are unable to meet you monthly commitments due to accident, sickness or unemployment.

It provides a financial safety net should the unforeseen happen and it can mean the difference between losing your home or keeping your head above water.

However, PPI has received a barrage of negative press with stories of mis-sold policies; poor compliance procedures; and over priced policies.

The OFT (Office of Fair Trading), the Financial Services Authority (FSA) and consumer groups have all expressed worries over PPI. There are now claims companies coming in to the marketplace with a view to getting compensation for clients who feel that they were mis-sold a PPI policy.

Simon Burgess from British Insurance, a specialist provider of the product, believes that around half of the 20m PPI policies held in the UK have been mis-sold. This, he says, will result in compensation claims bigger than those paid out in the endowment sales scandal.

At its peak, the FSA handled 1.5million complaints and took enforcement action against 10 firms who had mis-sold endowment policies. Over GBP2.3billion was paid out to angry clients.

Mr Burgess said: “PPI providers have been complacent - they haven't implemented robust processes to ensure their products are sold correctly…Firms will suffer. However, those who have behaved honourably have nothing to worry about."