Knight McGoldrick’s Paul Brimelow on payment protection insurance

WE RECENTLY recovered nearly £40,000 for a married couple who had been the victims of Payment Protection Insurance, commonly referred to as PPI. How can such a situation come about?

The problems arise when you are persuaded or sometimes coerced into buying PPI.

You may be told that if you do not purchase a PPI Policy you cannot have the loan. If the PPI Policy is purchased for a lump sum, that amount is then added to the original loan.

If you need a further loan, after a short while you have to repay the loan plus the cost of the policy.

Furthermore, the PPI Policy may only cover five years of a 20-year loan.

These clients were sold PPI Policies for three loans. Each loan paid off the previous loan. Therefore, on a total loan of £66,500, they had been sold PPI policies costing close to £40,000.

Aren’t lenders supposed to protect their customer and give them impartial advice? The problem may be commission.

A Competition Commission report suggests that commission paid on the purchase of single premium PPI policies is between 50-80% of the premium.

It is therefore apparent that many PPI policies were sold to obtain large commissions, rather than what was in the best interests of the Customer.

We have successfully obtained refunds of PPI Premiums for many other clients in a similar position.