COMMENT
Mis-Sold Payment Protection Insurance?

You can't have failed to notice that Payment Protection Insurance (PPI) has been getting rather a lot of bad publicity lately.

Just last week the Office of Fair Trading announced an investigation into the PPI market to see whether consumers are getting a good deal or not. Citizens Advice has already formally complained about PPI selling practices and the Financial Serivce Authority were none too impressed either when they reported the results of a mystery shopping study a few weeks ago.

Payment protection is one of the most profitable forms of insurance and it's offered with a number of credit products including mortgages, loans, credit and store cards. It protects a borrower's ability to pay the loan in case of accident, sickness or unemployment and it's thought that between 6.5 and 7.5 million policies are taken out each year generating some £5.5 billion in premiums.

However, it's often sold by people who don't quite know what they're selling to people who don't always know what they're buying. Various surveys have found that it's disproportionately expensive and the terms and conditions often preclude people from making a claim -- for example, people with bad backs or mental health problems (the sort of thing that can keep you off work for some time). Citizens Advice have even flagged up cases where borrowers cannot claim on their policy because of unreasonable requirements to provide medical evidence.

It's also fairly common for policies to be mis-sold to people who don't even qualify for PPI because, for example, they're self-employed.

It's hardly surprising then that with the recent bad publicity the Financial Ombudsman is expecting a possible influx of complaints from people who've bought it.

So, if you've got a PPI policy, dig out the terms and conditions to make sure you'd actually be able to make a claim if anything went wrong. In particular, pay attention to any age and health conditions in the terms of the policy. If you think you may have been mis-sold a policy you should complain to the firm concerned and ask for a full refund. If you get no joy, then head for the Financial Ombudsman - that's what he's there for.

Remember too that you can buy cheaper stand-alone PPI policies as an alternative to those offered by your lender.

How to complain to the Financial Ombudsman.