The last few months have seen the long-running saga of the payment protection insurance (PPI) mis-selling scandal finally nearing its conclusion, with…
The last few months have seen the long-running saga of the payment protection insurance (PPI) mis-selling scandal finally nearing its conclusion, with a High Court case ruling in favour of the Financial Services Authority and against the banks over the handling of complaints.
It means high street lenders have now set aside billions to pay back cash to claimants who were mis-sold protection on loans in recent years, some of whom would not have been able to claim on it due to obvious exclusions like being self-employed or having pre-existing medical conditions, while others had it added without their consent.
However, there is another side to the story, according to the British Bankers’ Association (BBA).
Its assistant director of media Brian Capon said PPI is in fact a highly worthwhile product and changes to the rules meaning it cannot be taken out until 14 days after a loan is agreed could lead to many who would benefit from it missing out on important protection.
He stated: “There is the danger that people who stand to benefit most from the cover will not take it out, leaving themselves in a vulnerable position.”
Such people, Mr Capon reasoned, may face major difficulties paying their loan if they take it out and suffer changes in circumstances.
Illness, injury, redundancy and death are among the contingencies a typical PPI policy covers against.
The BBA gave up its PPI compensation fight last month, when it announced it would not be appealing the High Court decision against them in April and banks would instead move on to setting up refunds “In the interest of providing certainty for their customers”.
By Joe White