The Implications of Mis-sold PPI

In either way, Payment Protection Insurance (PPI) can be beneficial or risky.

What is PPI?

PPI, which stands for Payment Protection Insurance, is offered when a person takes out a loan of any kind, a mortgage or a credit card. It is a form of insurance policy. Known by other names like loan insurance, credit protection and debt repayment cover, the endorsed objective of PPI is to protect the loan (or house in the case of mortgage) by backing up repayments and debts in the event the client can no longer continue temporarily the outstandings.

How PPI Benefits Consumers?

Under the PPI policy, the consumer has to pay a fixed sum of money each month to fully cover, or cover a percentage of dues on the client’s mortgage or loan in the event he becomes sick or unemployed. That being said, the loan or house can be saved by claiming a PPI policy through providing a finite payouts for loan repayments, usually in a span of 12 to 24 months until the person can get back on his feet.  In this position, PPI is soundly beneficial only if the person concerned understands the policy.

What Happens in Mis-sold PPI?

The problem on mis-sold PPI stems from the ways how banks and insurance companies pushed the policy to consumers. Some policies have been sold to people who actually do not need PPI. The complaints about mis-sold PPI are staggering. Because PPI is mostly offered along with loans, mortgages and credit cards, banks and companies make huge profits out of it.

Interestingly, the trouble on mis-sold PPI has lead to increased bank employment figures. The sudden rise is due to high demand of financial services to treat the effects of mis-sold PPI, most of them concerning PPI refunds.