Payment Protection Insurance
Payment Protection Insurance (PPI) was an insurance policy which became popular in the 1990s, as banks often sold it to customers taking out credit such as a loan, credit card or mortgage.
The policy was designed to protect the borrower if they had an accident or lost their job, leaving them unable to make repayments.
However, pressure on sales staff to sell as many profitable policies as possible meant that millions of customers were sold policies which they did not need; for example, retired and self-employed people sold policies did not stand to benefit from them.
In many cases, sales staff simply did not tell customers about the policy, only including the details in the small print and rolling the cost of the insurance into loan repayments.
The Financial Conduct Authority outright banned PPI sales in 2009 because of the huge number of policies being mis-sold to customers.
This opened the floodgates for millions of mis-sold PPI claims, which forced banks to refund customers who had been short-changed Lloyds bank, the worst offender, had to cough up some £20 billion over the claims.
The deadline for new mis-sold PPI claims was in August 2019. But, having just caught their breath, it seems banks could be in for another round of claims.
The string of court cases ruling in favour of customers against the big banks hint that an opening for more customers to make these claims could be on the horizon.
The recent court cases are based on whether or not it was fair for the banks to sell policies without informing the customer of the enormous commission charged.