In what I think is going to be a very welcome move forward, Lloyds TSB have today announced that they are going to stop selling Payment Protection Insurance (“PPI”) policies with their loans.
PPI is supposed to help people pay their loan if they lose their job, or fall ill. They are therefore a good idea, and beneficial for a lot of people. However, often when policies are sold with the loans, they are not only far more expensive than similar products on the market, but are also added to the loan. Therefore, borrowers end up paying a high rate of interest on the policy, as well as the amount they borrowed, increasing the overall cost of the loan.
PPI policies have received extensive criticism over the past few years, and numerous banks have come under fire for policies being mis-sold. In the past year, 30% of all new complaints made to the Financial Ombudsman (“FOS”), were in relation to PPI policies.
As a solicitor specialising in disputed Consumer Credit Agreements, I have seen many cases where borrowers have been sold policies that are very expensive, and often do not cover them for what they would expect to be covered for. The most common example is where a person is sold a policy when they are self employed, which normally excludes them from bringing a claim. Many people have therefore managed to recover the amount of the PPI, and have it knocked off the remaining balance of their loan.
There are also certain cases where people are told that the PPI policy is compulsory, and that they cannot have the loan without it. If you were told this, and you signed your Consumer Credit Agreement before the 6th April 2007, you may be able claim that the entire agreement is unenforceable. However, this is a very complex area of law, and you should always seek specialist legal advice.
If you have a loan agreement, whether or not you took out PPI, Stephensons offer a free initial assessment of the agreement to see whether or not it can be challenged. If it can be challenged, you may be entitled to Legal Aid, subject to financial eligibility. You should contact our specialist Consumer team on 01942 777777 to speak to one of our advisors.
By consumer solicitor, Heather Korwin-Syzmanowska