What is PPI
PPI or payment protection insurance is a type of protection or ‘cover’ supplied by a lender at the point of sale of a financial product. We should know that very consumer will be protected in case of they are buying one or more financial products.
Commonly sold alongside mortgages, credit cards or loans to protect the policyholder in the event o becoming ill, unemployed or anything outside of the holders control that effects their ability to earn a living, and so be unable to pay back the finance.
Problems arose long after the initial inset of the policy when consumers began realizing they were in fact not covered by the policy after paying for it for several years. It was the big mistake.
Complaints ensued and large multi-national banks were fined by the FSA (now FCA or financial conduct authority).
The biggest fine fell at the feet of Alliance and Leicester who were forced to handover over £7m thanks to their part in mis-selling the policy to customers who were not eligible to have it in the first place.
Often mis-sold due the customer being unemployed at the time, now banks have refunded up to £20bn in compensation and make the consumer happy.