Keypoint PPI Blog

Payment protection insurance, also known as PPI, came 2^nd in the “Which? Top 10 useless financial products” list. They go on to say each of the products identified, including extended warranties and secured loans will “leave you seriously out of pocket”.

Here’s what Which? had to say about payment protection insurance:

“PPI has been the subject of a prolonged mis-selling scandal. Not only have thousands of consumers been sold PPI without even being asked if they want it; others – for instance, self-employed people or those with pre-existing medical conditions – have been sold payment protection insurance although there is little chance it would cover them in the event they needed to claim.

What’s more, PPI is expensive. Adding payment protection insurance to a £7,500 personal loan, to be repaid over five years, could cost an extra £2,000 – £3,000.”

Here’s the rest of the list from Which?:

1. Mobile Phone Insurance
2. Payment Protection Insurance (PPI)
3. Extended Warranties
4. Secured Loans
5. Debt Management Plans
6. Structured Products
7. ID Fraud Insurance
8. Store Cards
9. With-profits Funds
10. Packaged Bank Accounts

Do any of you have any of the above products? Do any of top 10 products make your stomach turn at the thought of them? We’d love to hear your thoughts and stories on the above financial products (especially if it involved PPI).

Latest information published from the Financial Ombudsman Service, FOS shows insurance disputes relating to PPI claims were up by 38% in 2009/10.

During this period FOS has  resolved 166 321  insurance disputes, which represents an all-time record and a 46% annual increase. Compensation was paid out to consumers in 50% of the cases referred.

There has been a 38% rise in complaints as a direct result of increasing PPI claims and missold PPI disputes. In fact, three out of ten disputes presented to the ombudsman service directly relate to PPI claims and missold PPI disputes, which is a staggering increase of 58% on the year previously.

Credit and banking complaints have also risen by 30%, although complaints regarding investments remained comparatively stable. It has been revealed that disputes relating to motor insurance have dropped by 13% and complaints relating to the pension also fell by a whopping 27%.

The newly appointed chief ombudsman and chief executive, Natalie Ceeney, believes that the current claim resolution expectations will be around the 200 000 mark, whereas 10 years ago, settling 25 000 disputes would have been considered the norm and was the initial expectation when the organisation was first established.

This represents a current eight-fold increase in terms of caseload, and as a result, the FOS needs to operate on a completely different scale than they were originally set up for 10 years ago. It appears that the number of complaints overall will not see any decrease over the coming years, so plans need to be put in place to cater for the influx and to ensure the FOS is ready and able, to meet the expectations and demands, of both customers and stakeholders.

A provisional verdict released by the Competition Commission has stated that they intend to proceed with a prohibition of PPI sales at the point of sale of other financial products, such as mortgages and other types of loans. An investigation undertaken by the Office of Fair Trading suggested the ban in January 2009.

If and when the ban begins, when a customer purchases financial products and services, there will be a week’s cooling off period before they can obtain PPI. As with other cooling off periods, the goal is that customers have time to look for other providers and not feel pressured into purchasing PPI. If, however, a customer specifically asks for PPI, the sale may still take place.

The Commission appears to be wavering in its decision, though, as fresh evidence comes to light.

The interim verdict has been welcomed by the CEO of Which?, Peter Vicary-Smith; “People need to protect their finances but PPI has been widely discredited because of its expense and the poor cover it offers. Point of sale PPI puts consumers in a position where they have to choose between a shoddy protection product or no protection at all. It’s important that PPI is sold separately from other financial products to help consumers make an informed choice and find the protection product that best suits their needs.”

A definitive decision by the Commission is said to be reached by July. However in light of the new facts, the ban is in jeopardy. The reality discovered in customer studies undertaken by GfK indicate that they felt that money saved by shopping around was not enough incentive to do so, even though a cooling off period was a good idea.

On its website recently, the Competition Commission said “This new evidence suggested to us that customer inertia, driven by low balances, meant that we could not be sure that by imposing a point-of-sale prohibition alongside the other remedies, we would encourage sufficient customers to search to generate an effective competitive constraint on retail PPI providers.”

Here at Keypoint we have found that RBS/Nat West deal with all PPI complaints they receive  in the same way. They always respond with a standard offer of £750. Don’t be fobbed off by this. You could be entitled to so much more as we have found with many of our clients.

let us know if anyone else has experienced this.