Self-employed to Receive PPI Compensation
Self-employed people who have been mis-sold payment protection insurance (PPI) could receive compensation under new rules announced by industry watchdog the Financial Services Authority (FSA).
Lenders have been instructed by the FSA to review 185,000 individual cases about PPI cover, whose complaints were arbitrarily dismissed.
The financial watchdog said that lenders had rejected 60% of PPI complaints they received. Of these, 16% had gone on to the Financial Ombudsman Service, where 80% of these were upheld in the customer’s favour.
PPI is designed to protect borrowers from the risk of defaulting on debt payments if they fall ill or become unemployed. However, the cover has been widely criticised as being sold to people who may never be able to make a valid claim such as the self-employed.
According to the FSA, it has instructed banks and other lenders to compensate customers who may have been mis-sold PPI.
“Where we find problems in PPI sales or complaint handling, firms can expect tough action, including requiring them to undertake reviews and, where appropriate, pay redress,”
said FSA managing director of retail markets, Jon Pain.
FSA spokesman, Robin Gordon-Walker, added:
“The lenders will have to write to these 185,000 people to say they are looking at their claims again, and those that are eligible will get compensation. The lenders will reassess the complaints against the guidance which sets out if they were suitable for PPI in the first place.
“For example, the complaint could be that the lender didn’t explain to the individual that they wouldn’t be able to claim on that particular policy because they are self-employed,” said Gordon Walker. “The FSA’s rules already require the person selling to explain the benefits and the key features of the policy.”
British Bankers’ Association (BBA) spokeswoman, Lesley McLeod, said that anyone who feels they have been mis-sold a PPI product should approach their provider.
“If any individual, self-employed or otherwise, takes PPI out in relation to a bank loan or another product and later finds it is not suitable, they should go and speak to the lender who sold it to them,” she said.
McLeod added that if the individual is unhappy with the response they receive from their lender, they should then follow the Financial Ombudsman Service’s complaints procedure.
Earlier this year the Competition Commission announced that from October 2010 lenders will not be able to sell PPI at the point at which they grant a loan or for seven days afterwards.