Written by John Kruse, one of the leading experts on Bailiff Law, this consumer friendly guide is essential reading for anyone who comes into contact with a bailiff.
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After a two and a half year investigation into Payment Protection Insurance which, after overdraft charges, must rank as the financial industry's [problem] of the decade the FSA has found major failings but has not issued a penny in fines.
Ah Yes - single premum PPI cover where all your premiums over the term of the loan are paid upfront by adding them to the loan.
So a loan for £15,000 over 15 years ends up becoming a 20K loan with single premium PPI. AND you end up paying interest on the PPI premium. Incredible that this kind of product was even allowed, let alone sold.
The worst thing is that there are 100's of fairly decent PPI products that are cheap and you pay monthly for - but they didn't give the loan brokers the commission they craved.
Due to poor sales practices and assumptive selling techniques many people thought that this kind of cover was neccessary to take the loan out or were bullied into accepting it. A person is always at their weakest when applying for a loan.
And whats the very worst thing about this kind of cover? You cant actually claim hahahaha. The policies have a payout rate of under 10%. That means for every £1 the insurer takes in, they pay out less than 10p in claims. If you read the fine print these very expensive policies don't actually cover you for much at all.
This is the misselling of the decade.
Coming soon...........the misselling of the century........subprime mortgages.......
Sounds bad right? It gets worse. Most single premium PPI policies were sold on top of a secured loan where the lender takes a second charge against your home. This means that if you cant afford to pay your loan as it falls due your home is at risk. Whats the worst thing about secured loans? They are still unregulated by the FSA and do not currently fall under mortgage regulations. Yet they carry nearly all of the same risks as a mortgage and arguably increase them.
There is one bit of good news (kind of)........if you have been sold one of these policies with a secured loan there is a very,very good chance that you have been missold. There is almost no way that you can justify selling someone a single premium PPI policy. If this has happened to you I would look into claiming your money back immediately.
In other news Barclays has just sold First Plus (one of the biggest providers of secured loans and PPI in the country). Interestingly they have sold it at a loss - even though it is still raking in cash. Looks like they have seen the writing on the wall for this one.
There is one good bit of kind of good news........if you have been sold one of these policies with a secured loan there is a very,very good chance that you have been missold. There is almost no way that you can justify selling someone a single premium PPI policy. If this has happened to you I would look into claiming your money back immediately.
I have a loan with Black Horse,
It was for 10k secured, when getting the loan i neded the cash so just signed anything not really understanding it or being told in detail what the pit falls was.
I most deinatley wasn't told that the insurance would incure intrest every month. I knew it was added to the loan but that was it.
After 2 years of having the loan i have paid back over 5k and now still have a ballance 11,500 to pay off. I spoke with them about cancelling the insurance and was told it was nearly all paid upfront and if i cancell now i would only get 1,200 approx back as more of the insurance is paid upfront and then less gets paid towards it as time goes on.
Hence i still have nearly 5 years left to pay of the loan so its not worth cancelling as if i am unemployed it will pay the loan for 1 year which would eqate to 2, 500 (cant remeber being told it was only for 12 months)
So yes i feel [problem]med as they also then explaind i paid intrest on the insurance as well. I remember when i took the loan a figure of 13,500 which i thought i was to pay back and thought yes thats ok but i guess this was the figure with the loan and insurance.
I feel the big [problem] in all this is when anyone goes for a loan they usually desperatly need the cash hence they just sign everything just to get the loan i did and just wanted to get out of there as soon as i could with everthing singned these loan companys are aware of this and abuse this.
Another very intresting point is the loan insurance could be deffered until the end of the loan ie: i work with solicitors and i know that when they run a case for PI RTA etc they take out a after the event insrance policy which is paid once the claim is complete, if the case fails they claim on the insurance if not they pay the premium at the end of the claim. The same thing could be done with loans hence no intrest to be paid.
I also know that around 40% of an insurance policy is paid as a commision in most types of insurances. what a [problem] they get half the money and we pay intrest on that as well.
I dont want to rock the boat so would rather wait until my loans paid off then put a claim in for miss selling as they told me practicaly nothing just sign here. maybe gave me some paperwork to take away with me but as ussual it never got read.
By the way i only went in for 3k unsecured loan and was told because of my credit rating i would be better getting a 10k secured loan which had a lower intrest rate. they saw me coming!!!
Well CRFX
after all your hard work i think you know just how bitter i am about the F(raudulent)[problem])A(rtist) they are,they are meant to be the HONEST BROKERS in the Finacial World for Consumers,what a shower........i think MR BROWN should shut them down as a [problem] orginisation,i cannot once think were they have prosecuted the BIG BOYS but have gone out of the way to defend them in most instances as well as being untruthfull ,i would'nt give them the time of day.....so where or when ever i see any referance to the FSA i will just ignore it they are not even worth a second glance and as for all these ex b******s and mr Clive Briault, FSA Managing Director of Retail Markets...gggrrrr i am stuck for words well think ive said enough,but your work to date has been outstanding and has shown everyone that they are not to be trusted
patrickq1
She is kinda right in that respect - some policies are really cheap and the cover is good. For instance MPPI (mortgage Payment Protection Insurance - can be ok - and has a definate benefit). Unfortunately the vast, vast majority that have been sold with secured loans are totally and utterley unsuitable. The problem for the insurance industry is that the public are on the verge of never trusting this kind of cover ever again as a result of the vast misselling of single premium PPI.
The bottom line - single premium PPI needs to be banned completely - there was never then and there is not now any justification for it to be sold at all - it will NEVER be in the best interest of the customer to pay all the premiums at once and add them to a loan - when you say it out loud rather than look at it on a complicated loan app it should be blindingly obvious.
Of course some people have got mighty rich off it - The previous poster said that 40% commission was available on the cover - actually it can be up to 70%. And a single premium PPI policy can be up to 25% of the loan amount - do the math - its scary.
Much as I think the FSA are a bunch of loons - to be fair to them they have been trying to clamp down on this for a while - firms have resisted big time due to the commissions involved -put it this way - without single premium PPI, selling secured loans would not be profitable - the FSA indicated 2 years ago that they would wash their hands of it if it all turned sour - e.g: The FSA have basically declared open season on single premium PPI with regards to claims - pretty much anyone who claims should ultimately be successful.
There will be no 'waiver' exemption for the secured loan boys.
I think i was one of the more fortunate ones i had PPI with Halifax and when i took ILL their was no trouble whatsoever,but like most its the luck of the draw in who gets it an who dose'nt
So who will be the first to put together the letters etc, I for one am going through my files now to find the PPI's that I have had forced on me over the years.
FSA whitewash PPI report
charges, must rank as the financial industry's [problem] of the decade the FSA has found major failings but has not issued a penny in fines.
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