What has Changed in the PPI Market

By: Nik Jones

Unfortunately many consumers have suffered significant financial loss through mis-selling of Payment Protection Insurance (PPI), while the financial institutions made considerable profits. Not only was the product aggressively sold to customers who did not want or need it, but the product was poorly designed and often very expensive.

The tide perhaps began to turn in September 2005, when Citizens Advice made a super-complaint to the Office of Fair Trading (OFT) regarding PPI. The OFT then decided to refer the PPI market to the Competition Commission (CC).

Later in 2005, the Financial Services Authority (FSA) published the first of its 'thematic reviews' into PPI. The FSA visited a selection of firms selling PPI, and found widespread failings. The firms giving rise to the greatest concerns were investigated further and 24 firms were fined by the FSA regarding PPI.

In 2008, complaints about PPI to the Financial Ombudsman Service (FOS) began to escalate. Those making a PPI complaint to a financial institution often had little joy, but customers were finding that the FOS was taking a different view. The FOS is not a consumer champion: it makes balanced decisions as to whether the customer or the firm is in the right, yet it found in favour of the customer in over 80% of the PPI cases it handled from 'big four' banks in the second half of 2011. (Source: Which?)

In October 2009, the CC announced that lenders would no longer be able to sell PPI at the same time as the loan, and would have to wait seven days before attempting this. This effectively killed off single premium plans. The CC said that very few customers were shopping around for their PPI, and that this was leading to expensive, poorly designed policies being sold.

In May 2011, the major banks admitted defeat in a legal battle with the FSA. Since then these banks have set aside huge amounts for PPI redress - 3.2 billion in the case of Lloyds - in the expectation of having to send many PPI refund letters.

The FSA could fine companies with unsound sales practices, but was powerless to act regarding product design. Many PPI policies were single premium plans, with the premium added to the loan amount. These policies usually ran for only three to five years, even if the loan was for 25 years, and customers wishing to cancel their insurance were often hit by unfavourable refunds.

In early 2013, the FSA will be split into two. One of the new bodies will be the Financial Conduct Authority, which will be granted the power to ban poorly designed products at outset.

So there is certainly no need to feel like making a complaint would be a forlorn exercise. It is not a case of 'you against a large corporation'. Claiming back mis-sold PPI has never been easier, why not look into doing so today?

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PPI Refund 4 Me is a trading name of UKMS Money Solutions Limited regulated by the Ministry of Justice in respect of regulated claims management activities. CRM26720

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