Complaints On Payment Protection Insurance For Loans Increase
Over the course of the past few months we have reported on a number of occasions about the problems with Payment Protection Insurance (PPI) which has been taken out to offer protection for people’s personal loans.
Many people who thought that their loan repayments were covered have discovered that they were not actually eligible for the policy which they had been sold and, of course, this is only ever found out at the time when the policy is needed most, when the policy holder makes a claim for accident sickness or unemployment.
Despite a number of steps by the Office of Fair Trading (OFT), the Competition Commission (CC) and insurance companies, to improve the advice and sales process connected with PPI policies, the number of complaints regarding loan insurance is continuing to rise, with an average of eight hundred complaints being submitted to the Financial Ombudsman Service (FOS) every week. What is a bigger concern is that of all the complaints which have been submitted, the vast majority have been upheld by the FOS.
Although there have been major changes to the way in which PPI alongside personal loans must now be sold, including a ban on single premium loan protection policies and a fourteen day period before a PPI policy can be sold with a loan to allow customers to shop around for the most suitable cover, the number of complaints is still rising and these mostly relate to policies sold prior to the recent changes.
Of course, it is likely that we will see an increased number of complaints about personal loan insurance, due to the current economic situation, as more claims are submitted to insurers due to rising unemployment levels. A spokesman for the FOS said “It (PPI) is still the biggest source of complaint, amounting to about a third of the total. We are upholding about 90 per cent of the cases we deal with and with one firm, 100 per cent of the cases.”
