Compensation claims for mis-sold PPI

Customers who have been mis-sold payment protection insurance (PPI) will now have some redress as independent companies start to look at some £20bn-worth of compensation claims. This makes it bigger than the endowment mis-selling scandal which cost around £2.35bn.

PPI has received a lot of negative press over the last year, yet, sold properly, it is a valuable insurance to have. Should the policyholder lose their job or become unable to work due to accident or sickness, the insurance will help towards loan repayments for up to 12 months (for some policies, it will pay for up to 24 months).

However, greedy lenders have sent the price of their PPI products sky high in a bid to recoup the money lost by them selling low interest charging loans. And their compliance procedures, in many cases, leave a lot to be desired. Hence the bad press for PPI.

However, the advent of claim firms specifically targeting the PPI sector should balance the situation out. BritishInsurance.com’s MD, Simon Burgess – who provides low-cost PPI - is setting up British Compensation early in 2007 in a bid to help people claim for mis-sold payment protection insurance.

Other companies who are looking to assist PPI victims include Conkers and Loancheck. The latter said that they would target the mortgage sector. Loancheck director John Whittaker says: "This is a hell of a racket that the financial institutions have exploited and there are many valid complaints."