Over the past couple of years an increasing number of consumers have become aware of the dangers of PPI, which stands for Payment Protection Insurance. In the past taking out an sort of finance, such as a loan, credit card, catalogue credit, or car finance, involved hearing a lengthy lecture from sales staff over how damaging it could be to take out the finance without some form of PPI to protect you financially, and in most cases customers buckled and ended up taking out the cover even if they didn’t really want it, which often caused issues because the cost of the cover does not come cheap.

However, pressure to purchase PPI was not the only problem, as investigations over recent years have discovered. In fact, investigations by authorities and regulators found that in some cases consumers were being given quotes on finance without being told that PPI had already been added, and in other cases customers were being sold PPI even though they were not actually eligible to ever make a claim on it.

The purpose of PPI is to cover your repayments on the debt in the event that you cannot make repayments due to sickness, injury, or redundancy, and in theory it can be an effective safeguard. However, many of those that have taken out this cover could not afford it, did not want or need it, could not claim on it because they were not eligible, and in some cases did not even know that they cover had been added to their finance.

Whilst the Financial Services Authority has been cracking down on the mis-selling of PPI over the past couple of years, it is clear that the problem is still around, and a number of firms continue to breach new regulations relating to the sale of PPI. This has been reflected in a recent incident where five motor dealerships were fined a collective £175,000 for failing to check the circumstances on customers to ensure that they could actually benefit from the cover if they needed to claim and for failing to monitor the advice that was being given by sales staff in relation to PPI.

An official from the FSA said: “Motor retailers that sell PPI have to meet the same standards as the rest of the financial services industry. All firms selling PPI must treat their customers fairly, including taking proper steps to make sure sales are suitable and customers are eligible to claim on the policy.”

In fact, over recent years the reputation that PPI has gained due to poor sales procedures has become so bad that some industry officials have dubbed this type of insurance nothing more than a protection racket. Furthermore an investigation by the Competition Commission earlier this year revealed that consumers were being ripped off to the tune of £1.4 billion when it came to PPI policies.

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