PPI - the next big financial mis-selling scandal?

Payment Protection Insurance (PPI) is an invaluable insurance that protects your monthly credit commitments should you become unable to work due to accident, sickness or involuntary redundancy.payment protection insurance
However, greedy lenders and credit card providers have given PPI a bad name with horror stories in the Press of rip-off pricing and worthless policies.

Around £5.5bn worth of policies are bought every year alongside loans and credit cards – and just £1bn (20%) of that is paid out to customers. That means that over £4bn is being made in profits and commissions.

As a comparison, car insurance payouts run at around 75% of total income.

Industry experts now expect a surge of compensation claims. Figures run into around 10 million or so policyholders who may have grounds to claim that they were mis-sold a policy or have inappropriate cover.

Simon Burgess from low-cost independent provider BritishInsurance.com anticipates that the overall payout could be bigger than that of the mortgage endowment mis-selling scandal.

With industry bodies the Financial Services Authority (FSA) and the Office of Fair Trading (OFT) now on the case and the recent fining of Loans.co.uk an amount of £455,000 for failing to treat customers fairly when selling PPI, it is good news for consumers.

Certainly, while there has been negative press coverage of PPI, now that bad sales practices and over pricing have been highlighted, consumers can make an educated choice when choosing PPI cover.

Shop around for PPI and buy it from a standalone provider – this will save you literally hundreds of pounds over the term of your loan.