Mis-Sold Finance Insurance: Are You a Victim?

Finance insurance, also known as payment protection insurance (PPI) or credit protection insurance, is designed to cover your loan repayments if you’re unable to work due to illness, unemployment, or accident. While it can be a valuable safety net, it has also been widely mis-sold, becoming one of the biggest financial scandals in recent history.

Mis-selling occurs when the insurance is unsuitable for the customer, or when they are pressured or misled into purchasing it. Common mis-selling practices include:

• Failure to Explain the Policy Fully: Customers weren’t given clear information about the policy’s exclusions, limitations, and terms. They may not have understood what situations were covered and what weren’t.
• Pressure to Purchase: Salespeople aggressively pressured customers into buying the insurance, often implying it was required to secure the loan or credit. This made it difficult for customers to decline without jeopardizing their application.
• Unsuitable Policies: The insurance was sold to individuals who were ineligible to claim. For example, self-employed individuals were sold policies that only covered employed individuals, or individuals with pre-existing medical conditions weren’t informed that their condition would negate any potential claim.
• Lack of Affordability Assessment: No attempt was made to assess whether the customer could afford the insurance premiums in addition to their loan repayments.
• Commission-Driven Sales: Salespeople prioritized earning commission over the customer’s best interests, pushing unsuitable policies to maximize their income.
• Implied Obligation: Customers were led to believe that taking out the insurance was compulsory or that it would improve their chances of loan approval.

How to Identify if You Were Mis-Sold:

Consider these questions:

• Were you told you needed the insurance to get the loan?
• Were you aware of the exclusions and limitations of the policy?
• Did you understand the terms and conditions?
• Were you self-employed or had a pre-existing medical condition that would have made claiming difficult?
• Were you pressured to purchase the insurance?
• Were you told the insurance was compulsory?

If you answered “yes” to any of these questions, you may have been mis-sold the insurance.

What to Do If You Suspect Mis-Selling:

Although the official PPI claim deadline has passed, it’s still worth investigating. You may be able to pursue a claim if there is evidence of unfair relationship between you and the lender under Section 140A of the Consumer Credit Act 1974.

• Gather Documentation: Collect any documents related to the loan and the insurance policy, including loan agreements, policy documents, and correspondence with the lender.
• Seek Advice: Consult with a financial advisor or legal professional to assess your situation and determine the best course of action.

Mis-sold finance insurance has had a significant impact on consumers. Understanding your rights and taking action if you suspect mis-selling is crucial to seeking redress and potentially recovering compensation.