PPI in the UK
In the United Kingdom, payment protection is an insurance product that is meant to protect one’s outstanding debts in case one becomes incapacitated, encounters an accident, or loses his job involuntarily. It is usually sold as an attachment to personal loans, credit cards, and mortgages. Today, over two million policy holders of payment protection insurance claim that they have been mis-sold PPI by different financial institutions from which they obtained their personal loans, mortgages, and when they applied for credit cards. For this reason, payment protection insurance has become a big controversy in the United Kingdom.
Mis-sold
The controversy lies in what allegedly took place in selling millions of PPI: claimants complain that they have either been sold PPI without their knowledge, or told that PPI was a requirement for the loan they are purchasing. This resulted to millions of people unaware that they have or been sold PPI that they will never be able to use or are not needed. Since August of 2010, there is an estimated three million people in the United Kingdom who are in queue for compensation because of mis-sold PPI. More are expected to claim their compensations in the coming months as the battle for the PPI rages on between financial institutions and consumers.
Backlog of Complaints
There have been complaints about the manner in which claims are being processed. The Financial Ombudsman Service or FOS, the primary body in the United Kingdom that deals with disputes over financial and banking matters, came under flak from consumers for taking too long to respond to the complaints. One policyholder of a PPI complained of having to wait for one year and five months without any progress done in the part of the FOS. For its part, the FOS has an unprecedented number of complaints in payment protection insurance claims, which receives over 150 complaints a day, causing backlogs. To assuage the problem, the FOS has increased the number of its PPI claims handlers and added 300 more staff dedicated to PPI.
Alternative Options
The small claims court is an alternative option to the slow proceedings at the FOS. While the small claims court is a much faster way to process a claim, it is not free like the FOS. Fewer people choose this option as they could end up paying for more than what they will get in their claims. Increasingly becoming popular are claims companies in the United Kingdom. The system works by seeing if a consumer has valid grounds for making a claim. This is done by filling out a simple form online and submitting it to the compan. This is done to know whether one is mis-sold PPI. Once one is determined eligible to make a claim, the company helps the claimant and would take a percentage of whatever claims he gets back.
Goodwill Payouts?
Other consumers are content with accepting goodwill payments from banks who allegedly mis-sold PPI. This may seem like a tempting offer, but this is just an estimated fraction of what the potential payout is actually worth. For those who are not willing to go through a long battle in the courts for the claims, getting a goodwill payment from the bank is already a good bargain, especially if they are one of the millions who never knew they had PPI or have been sold PPI.
With the continuing financial crisis in the European Union not ending any time soon, there are two things to be expected: more and more people will scramble to find anything for income and PPI claims will not be over anytime soon.