What are the major grounds for mis-selling PPI?

If you have been mis-sold a Payment Protection Insurance (PPI) Policy you may have the opportunity to make a claim for compensation. There are several major grounds to look out for to see if you are eligible for claiming for mis-sold PPI.

PPI mis-selling tends to happen when businesses market, promote or sell a PPI policy in a such a way that it breaches the rules and regulations set by the Financial Services Authority (FSA) to protect consumers from unfair and deceitful business practices. These rules are contained in the FSA regulatory handbook and are referred to as Insurance Conduct of Business Standards; otherwise known as ICOBS.

ICOBS provide a in depth and detailed template for the way in which a financial services provider should deal with all aspects of their insurance business. The main principles in the standards require PPI sellers to deal with consumers in a fair, open and honest manner; gather the correct information about the customer to ensure that the products they recommend are suitable for their needs; make consumers aware of any restrictions or exclusions contained in the policy; and keep adequate records.

PPI can be sold in a variety of circumstances where it is in breach of one or more of these regulations, some of the most common grounds are listed below:

PPI was added without the consumer's consent
PPI is an 'optional' extra, but many PPI companies have been known to write it into credit agreements by default, hiding it away in the small print, forcing the consumer to specifically ask for the PPI to be removed if he did not want it.

The credit product was made conditional only on the purchase of PPI
PPI policies were generally sold alongside credit products and there are a large number of documented cases in which salespeople have lied to consumers in order to try and close a sale by telling the consumer that their credit application would not be approved unless they also purchased PPI cover.

The consumer was younger than 18 when the policy was taken out
It is illegal for someone under the age of 18 to enter into certain types of contracts in their own name, and this includes credit agreements and certain financial products such as insurance. If you took out a policy before you were 18, the policy will be invalid and the PPI provider will not have to honour it by giving you a full refund. Many financial salesmen will ignore this basic legal principle and sell PPI polices to minors in order to increase their own commission.

The consumer was over 65 when the PPI policy was sold
A PPI contract is effectively a bet that the insurance provider will not need to pay out. However, because people can retire after the age of 65, most PPI policies will not provide cover beyond this age as it is much more likely that these consumers will need to claim under the policy. But, this has not stopped PPI sellers from persuading consumers who are over the retirement age to purchase a PPI policy even though it is of no use to them.

You had a pre-existing illness such as stress or back ache
Many types of illness were routinely excluded from PPI polices, which would not cover consumers in the event that this illness meant that they were unable to work at a later date, although salespeople rarely made the consumer aware of this. Illnesses which commonly fall into this category included any kind of mental illness or server stress and any kind of muscle pain.

You were not advised you could get the same product for cheaper elsewhere
The FSA rules state that credit providers are not allowed to create the impression that consumers are limited to their own range of products when choosing PPI. The PPI providers will need to advise customers of their right to shop around for the best deal. However, very few credit providers have complied with this rule, and a large proportion of mis-selling claims are based on this failing.

The policy was unsuitable for your needs
Financial services providers must not sell insurance products to consumers unless they have gathered sufficient information to give appropriate advice, and the policy which they recommend is suitable for the consumer. The salesperson should enquire about the consumer's state of heath, employment status, and any other payment cover or life assurance which the consumer has. They should also make the consumer aware of any restrictions or exclusions contained in the policy terms which might be relevant. Selling a PPI product which is unsuitable for the consumer's circumstances and needs is one of the most common grounds for making a mis-selling claim.

For more legal advice and information about mis-sold PPI and other sources please visit lawontheweb.co.uk