Follow Us on Facebook Follow Us on Twitter Follow Us on Google+ Follow Us on Pinterest Follow Us on Tumblr Visit our YouTube Channel Subscribe to our Feed Subscribe via FriendFeed

Connect With Us

Lloyds Banking Group Moves Regarding PPI Payment Protection Insurance

by Jim ONeil on May 11, 2011

in uk banks

The payment protection insurance (PPI) saga goes on in the UK. Last week, Lloyds Banking Group announced that it will not pursue legal action regarding issuance of this insurance. It also has allocated approximately £2.3 billion to compensate the thousands of people who were missold PPI, which is designed to cover credit card or loan repayments in the event of layoff or an illness that made a person unable to work.

A recent Financial Services Authority (FSA) ruling required that banks review every previous PPI sale, even if no consumer complaint was lodged. Current bank sales guidelines were to be used to determine whether a PPI policy was missold. Banks were attempting to overturn this but the court agreed with the FSA.

Following the announcement by Lloyds, other banks scrapped their planned appeals against the ruling. PPI policies have been missold for many years and banks are setting aside huge sums of money to rectify the issue.

In just one example, PPI was offered with loans for postgraduate education, in spite of the fact that only students who were working full time could make claims.

An extreme example involved a student who took out an educational loan and was diagnosed with cancer. After her illness forces her to drop the course, she filled a PPI claim. The bank refused to pay out a claim or refund her premium.

It was not until the media brought this situation to light that the bank offered redress and even then, it did not speak directly with the family.

Banks now need to determine how many PPI insurance policies were sold with loans like these. Consumers who unknowingly purchased PPI should be able to recoup their money. They should take a proactive approach if they purchased this insurance and lodge a complaint with the issuing bank to request a premium refund.

Comments on this entry are closed.

Previous post:

Next post: