Introduction
Payment Protection Insurance (PPI) is a financial product designed to cover consumers’ loan or credit card payments in case of illness, job loss, or other unforeseen circumstances that may prevent them from making payments.
What is PPI?
PPI is typically sold alongside loans, credit cards, and other financial products to provide peace of mind to consumers that their payments will be covered in case of emergencies.
How Does PPI Work?
When a consumer takes out a loan or credit card with PPI, they pay a monthly premium for the insurance. If they are unable to make payments due to a covered event, the insurance will kick in and cover the payments for a certain period.
Examples of PPI
- A consumer takes out a mortgage and purchases PPI to cover their payments in case of illness or job loss.
- Someone buys a car on finance and opts for PPI to ensure they can continue making payments if they face financial difficulties.
Case Studies
Many consumers have found themselves mis-sold PPI, either because they were not aware they had purchased it or because they were misled about its benefits. This has led to a series of high-profile scandals and court cases, with banks and financial institutions having to pay out billions in compensation to affected customers.
Statistics
According to the Financial Conduct Authority (FCA), over £35 billion has been paid out in PPI compensation since 2011. This has made PPI one of the costliest financial scandals in UK history.
Conclusion
While PPI can provide valuable protection for consumers, it is important to understand the terms and conditions of the insurance and ensure that it is suitable for your needs. If you believe you have been mis-sold PPI, you may be entitled to compensation.
