Payment Protection Insurance (PPI), which was sold aggressively by many of the clearing banks during the debt boom
of the 1980s and 1990s, has led to large provisions being made for losses as the banks have abandoned attempts to fight mis-selling claims.
of the 1980s and 1990s, has led to large provisions being made for losses as the banks have abandoned attempts to fight mis-selling claims.
Thousands of customers w ere sold PPI policies, which undertook to cover loan repayments on lo an in the event that the borrower became unemployed or fell ill and was unable to make the repayments. The policies were extremely profitable for the banks because the claim rates were very low and the policy costs were high.
However, following widespread complaints and successful litigation, the banks have abandoned their struggle and have earmarked more than £5 billion to meet claims.
With all the hoop-la about the proposed change to the ‘no win, no fee’ regime, another set of proposals, which may well be of greater importance for many people has slipped under the radar of the popular press.
The long-running battle between banks and their customers over alleged mis-selling of payment protection insurance (PPI) plans took another step forward last week when the High Court dismissed a challenge brought by the banks that guidance on such policies issued by the Financial Services Authority on sales of insurance did not apply to PPI policies.