What Is PPI?

Payment Protection Insurance (PPI) is sold by banks and other providers as a method of insuring debt incurred when taking out credit, be it a mortgage, loan or credit card. Its role is to cover the borrower against a range of circumstances that may prevent them from repaying the debt, such as an illness, accident, unemployment or death.

The PPI therefore enables the policy holder to continue to be able to fulfil monthly repayments, usually for a period of 12 months, after which they will be expected to be in a position to service the debt again.

It is also possible to secure the protection of a person's whole income which can be paid out until the person either returns to work or retires (usually equating to 50-60% of the income rather than a small amount to cover minimum payments, as with the other forms of PPI).

Who Has Been Mis Sold PPI?

It is estimated that almost three-quarters of the adult UK population has been mis sold PPI which has led to a high volume of PPI Claims over recent years, many of which have been successful. If you are one of the many who needlessly (and maybe even unwittingly) took out a PPI policy you could be entitled to a refund.

There are many ways in which PPI was mis sold - for a comprehensive overview of how borrowers were misled (and whether you may have been one of them) read our guide 'How was it mis sold?'

In short, mis sold PPI would have normally taken place when you first took out your mortgage, loan or credit card either online, face-to-face or over the telephone. If you bought a policy online then you may have been required to opt-out of including PPI, using a tick box. If so, then you may be entitled to make a PPI reclaim as this comes under the category of 'mis-selling'.

This technique of only allowing borrowers to opt-out was abolished in June 2007 in favour of an opt-in system; therefore if you bought a policy before this date then it is likely that you are eligible for a refund. Purchases made face-to-face and over the phone have also been cited as featuring cases of mis-selling, with borrowers often incorrectly told that PPI is compulsory. Also, those who are ineligible - such as the self-employed and over 65s ? have also been incorrectly sold PPI and would be entitled to a refund.

Why Did Lenders Mis Sell PPI?

But why would lenders feel the need to mislead? Well, staff would have been set strict targets to sell PPI policies, meaning they would be under real pressure to boost their numbers or face the prospect of pay cuts in some instances. This led to staff being rather underhand in their approach to selling PPI, which is why severe cases of misrepresentation took place.

To find out how much you could be entitled to, enter your details into our easy-to-use PPI calculator. To see whether you are eligible for a refund of your Payment Protection Insurance contact one of our advisors on 0800 043 2027. This hotline is open 24 hours a day, 7 days a week - so there'll always be someone to take your call and help you get your money back!