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There have been a number of reports recently into the ongoing problems with Payment Protection Insurance (PPI) with regard to miss-selling from loan providers and brokers and the level of complaints which have been generated from this type of business.

Payment Protection Insurance is designed to protect an individual’s regular monthly repayments on their personal loans, credit cards and mortgages, in the event of things such as accident, sickness or unemployment and can provide essential cover for someone who may have lost earnings through these events, maintaining their credit record and saving them from bad loan and credit card debts.

However, PPI has often been sold alongside a new loan or credit card as a matter of course, without adequate explanation of the product, or in some cases where the cover is inappropriate or not valid due to the client’s circumstances, and now the Financial Ombudsman Service (FOS) have called for additional restrictions and regulation of this product following a record number of customer complaints.

A spokesman for the FOS said “PPI complaints have risen ten fold in the past two years and now account for around 25 per cent of all the complaints we get.” The FOS is currently receiving approximately five hundred complaints each week relating to the sale of PPI policies and has described these products as a protection racket.

The British Bankers Association (BBA) has defended PPI sales processes and claims that additional regulation is not required and that current complaints handling procedures, which are adopted by the banks and other loan providers are adequate, but could be improved.

Their spokesman said “the financial services industry agrees that it is in the interests of customers to deal quickly and consistently with genuine complaints. But we do not agree that a regulatory response is needed to achieve this. Presently, the industry is actively working to determine the best way to handle PPI complaints across all providers consistently and efficiently.”