Tuesday 9th September, 2008 

Recent figures from a consumer organisation indicate that the Great British public are being ripped off by their lenders.

Which? today revealed that nearly 1.3 million people have taken out Payment Protection Insurance (PPI) in the mistaken belief that it would improve their prospects of being approved for a credit card. PPI is sold alongside loans, credit card, mortgages and finance agreements to cover those repayments for people who are unemployed or are off work due to illness.

It is estimated that around 9.8 million people in the UK have credit cards which have PPI attached. Incredibly, 13 per cent of these people mistakenly thought that the PPI was part of the conditions of their credit card or that their application would be seen more favourably if they took out the insurance.

So how much is lost each year to this scam? Credit card Payment Protection Insurance is worth in excess of £970 million a year to the industry and with the average policy costing an average of £127.60 it's obvious why 28% of those surveyed were informed by their providers that the insurance was a good idea. Perhaps the most revealing statistics of how much profitable PPI is the number of successful claims runs in at only 11%. Lets look at this figure, of all the people who claim on their insurance policy only one in ten are successful. Perhaps these people didn't actually loose their job or were not ill or it might have been because they never had a chance of claiming successfully because they were already excluded in the policy due to age or type of employment.

Unsurprisingly they type of cover a policy holder benefits from is not what they may have expected, unless they read and understand the small print.. Store and credit card PPI usually only covers the minimum monthly repayments which mean that the balance will never go down.

Doug Taylor, Which's Personal Finance Campaigner was quite critical of PPI stating that "Credit card PPI is a modern day snake oil - it's a useless product, expensive and poorly designed. As the credit crunch continues to take hold, people want to be protected and have peace of mind, but credit card PPI, like a house of cards, won't give you the support you need." He continued his damnation of PPI by saying %u201CIn this time of economic uncertainty, people are effectively throwing away £970 million each year, when they should be encouraged to seek independent financial advice about protecting their finances as a whole. No one should have to take out PPI on their credit card. Credit card PPI is the elephant in the room that can no longer be ignored."

If you feel you have been the victim of PPI mis-selling follow this simple check-list to see if you may be able to claim your money back. Should you answer "no" to any or all of the questions then you may have been mis-sold your PPI.

• Did the adviser make it clear that the insurance was optional?
• . Did the adviser tell you about the 'significant exclusions' under the policy? For example, the exclusion that states you won't be covered for any pre-existing medical condition, you might not be covered if you are over 65 or if you are self employed or on a fixed term contract?
• If you took out a loan or finance agreement, did the adviser make it clear that you would have to pay for the insurance up front in a single payment?
• If you had to pay for the insurance as a single premium, did the adviser make it clear that the insurance cost would be added to the loan and you would be paying interest on it?
• If your PPI policy expires before your loan or finance agreement does, you'll be paying interest on insurance that is no longer in force. Did the adviser make this clear?

If you think you have been mi-sold PPI and need some help and assistance in claiming then visit our forum.

Written by George