Incidents of PPI Claims will Continue to Rise as stated by FOS

In the records revealed by the Financial Ombudsman Service revealed that insurance conflicts relating ppi claims were rising by 38% in 2009 and this year. During this period, Financial Ombudsman Service has resolved 166,321 payment protection insurance conflicts which represent a record record and also a 46% yearly increase. 50% of these cases referred to FOS were able to have their ppi claims against the financial firms.

It was documented that issues rise up to 38% as a direct result of increasing ppi claims and other mis-sold ppi related disputes. Actually, three out ten arguments introduced on the Ombudsman’s office directly relate to ppi claims and mis-sold ppi disputes, which is a staggering increase of 58% on the previous year.

Payment protection insurance is a product sold by financial services companies together with the customer’s loan to protect them and their family against unusual changes in their financial circumstances which can impact upon your ability to meet their regular financial loan repayments. Insurance policy could have been added as a lump sum together with the borrower’s loan. Some borrowers may have been offered a regular monthly premium. The cost of the policy will then be paid for separate to the borrower’s monthly loan repayments. However, ppi policies are failing to pay out one of the most vulnerable and to those who actually need it.

The reason was because these borrowers making ppi claims didn’t meet the criteria of the cover.

PPI policy is really expensive and it can add between 13% – 56% to the price of the loan that the borrower required. Some consumers are unaware that they even had a ppi policy as it had been automatically added to the loan by the sales representative of the lending company or banks. There are 20 million active ppi policies all over the country with only 2% of these policyholders attempting to use their policies when they are jobless. One in every four ppi claims made by consumers is declined by the insurer because of the exemption clauses that they had not been made aware of.

Due to mis-selling process of this financial product, a provisional verdict has been release by the Competition Commission has stated that they intend to proceed with a prohibition of ppi sales at the point of other financial products, just like mortgages as well as other types of loans. An investigation made by the Office of Fair Trading suggested the ban in 2009. However, certain banks appealed against the Competition Commissions decision to prohibit the selling of ppi when loans are taken. Some individuals have said that given the amount of money that they have taken from them and all sorts of the ppi complaints which were won, people think that banks would just surrender and just go along with the suspension.