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 2 million payment protection insurance policies 'worthless' As many as two 1000000 payment protection insurance policies may have been sold to consumers who might never be able to make a claim on them, research by lead consumer body Which? Reveals.Payment protection insurance (PPI) is normally taken out to cover loan or debt repayments in case people are unable to work due to unwellness or redundancy. Banks offer it when client take out new recognition cards or loans, but it is also sold by car dealerships, retailers and other businesses. Which? Surveyed consumers who had taken out PPI cover in the past five years, and found that about one third (32 per cent) might not qualify for the benefits they have been paying for. Betwixt 1.7 and 2.1 1000000 policies could be perfectly worthless, because the policyholders fall foul of one of the 'significant exclusions' hidden in the small-print of their policy. "People who are self-employed or on a fixed-term job contract, for illustration, often aren't covered by PPI. Nor are many people aged 65 and over, or people who might claim for absences relating to pre-existing medical status", explained a Which? Interpreter. In add-on, many consumers might not be aware that PPI only pays out for a limited amount of time, normally 12 months, and that insurance taken out on recognition or store cards often screen no more than the lower limit monthly payment. "We've ever known that people were being mis-sold, but we were still amazed to discover the scale of it," Which? Personal finance candidate Doug Deems Taylor said. "It appears that salespeople are chasing their commissions, while their bosses are chasing profits. Where's the sense of duty to the client?" Which?'s research comes only days earlier the publication of what is expected to be a extremely critical study on the £5billion-a-year PPI industry from the Competition Commission, due on 5th June. The report is likely to propose drastic changes to the way payment protection insurance policies are sold in order to ensure that consumers are able to make informed decisions and are given more choice and fairer prices. In view of the potential risk to consumers, the FSA has declared payment protection insurance a priority and has fined or censured a series of companies for their appalling selling practices. In a statement issued yesterday the British Bankers Association (BBA) emphasised that PPI still offered a viable means of protection for consumers: "PPI provides borrowers with a plan B if their circumstances change." "If they lose their jobs or become ill, their commitments can still be met, so it's important that people are not discouraged from taking it out." However, consumers should check policies carefully before taking them out, say consumer campaigners, and those who think they have already been should take action immediately. Doug Taylor of Which? Recommends: "Now's the time to fight back." © Fair Investment Company Ltd |