Payment Protection Insurance Still Controversial

Posted by admin

September 16, 2008

Despite heavy fines levied against lenders in the recent past, the Financial Ombudsman Service continues to receive hundreds of complaints per week over the highly questionable insurance, says the Times Online.

PPI is typically sold as a form of protection on financial products such as personal loans, mortgages, and credit cards in the event the borrower is unable to make regular repayments due to illness or unemployment. This particular insurance product is a high earner for most lenders however, critics say it is overpriced and “riddled with exclusions” thereby making it difficult for many to even make a claim.

One of the most common complaints is the borrower not realising they were sold Payment Protection Insurance along with their loan or credit card. Some say they were not properly explained the cost of the insurance and were unaware they could take out a PPI policy with a provider other than their lender.

The Ombudsman is now calling on the FSA for further investigation and asking the watchdog group to share some of the burden to resolve issues. This will in turn help alleviate the onus on the Ombudsman office which is handling individual complaints on a daily basis.

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