Nearly three million people could get PPI compensation

According to the UK’s financial regulator, the Financial Services Authority, nearly three million people could be in line for compensation over mis-sold PPI or Payment Protection Insurance. The regulator claims that 2.75 million people could be entitled to compensation totalling £2.7 billion.

Banks and financial institutions have been given until the beginning of December this year to bring in new rules with regards to dealing with complaints over PPI. The FSA has already said that over a five year period it had found a “wide and deep evidence of weaknesses in PPI sales”.

PPI is a type of insurance cover that is designed to cover repayments on loans and other forms of borrowing for a specified period of time in the event that the policyholder is unable to make repayments due to redundancy, sickness, or injury. However, investigations into the sale of this type of cover found that in many cases the insurance cover was being mis-sold.

One of the ways in which cover has been mis-sold is through selling to those that could not claim, such as the self employed. In other cases consumers were led to believe that they had to take out the cover to get the finance that they needed. In some instances consumers were not even aware that PPI, which is a costly form of cover, had been added to their finance agreement.

In a statement the FSA said: “Today is the culmination of months of hard work and now, with these measures, we look forward to consumers being treated fairly whether they are buying or complaining about PPI. Since we took over the regulation of PPI we’ve carried out 24 investigations and three thematic reviews, issued warnings, halted the selling of single premium PPI with unsecured personal loans, visited over 200 firms, and handed out some very significant fines.”

Tags: Financial Regulator, ppi, payment protection insurance, insurance cover, finance