|
Citizens Advice today said it was delighted by the announcement by the Office of Fair Trading (OFT) that it is launching an investigation into the payment protection insurance (PPI) market.
The announcement comes in response to a Citizens Advice super complaint to the OFT calling for just such an investigation. The PPI business has an estimated 20 million policies in force and produces annual revenue in excess of £5 billion
Citizens Advice Director of Policy Teresa Perchard said:
“This is a clear signal that the OFT believes there is a case to answer. It is very good news indeed, and it marks the first step to a better deal for UK consumers.
“People buy payment protection insurance because they are looking for peace of mind. Given the scale of borrowing in the UK and the amount of money consumers spend on PPI, it is vitally important that they get a product that gives them this and meets their needs at a fair price.
“We would urge the industry not to wait for the outcome of the OFT investigation before reviewing their PPI products and making changes that will benefit consumers and give them a fair deal.”
A report published by the charity in September which formed the basis of its super complaint described how payment protection insurance is failing many of those who need it most, adding to their debts instead of protecting them against hard times.
Protection racket* - based on evidence from 270 Citizens Advice Bureaux around the country – argued that in many cases it is more about providing an additional source of profit for the financial industry than about protecting consumers.
The report found that the insurance sold to cover credit payments in the event of illness or job loss is often very expensive, mis-sold to people who cannot possibly claim on it, and designed to exclude many of the most common situations that can lead to debt problems.
Problems occur in nearly all sectors of the consumer credit market – from non-status mortgage lenders and hire purchase companies to major high street banks and credit card companies.
Top tips from Citizens Advice on payment protection insurance:
- Decide whether you actually need this insurance. It’s costly and may well not be worth it.
- Always read the small print and make sure it’s right for you. Check before signing any credit or car finance agreement that PPI is not included automatically – it should always be optional.
- Check out the common exclusions to make sure that you and all your circumstances are covered.
- When taking out a loan or a credit card over the phone always listen carefully to what you are signing up to.
- Always ask the insurance company for a copy of the payment protection policy, this is either the summaryof cover or a certificate
- Check to see if your life assurance is a cheaper way of making sure that a loan will be repaid if you die. Your employer’s sick pay scheme may be enough to cover repayments should you become ill.
- Be aware that insurers can reject claims on the basis of age, self-employment, pre-existing medical conditions, mental health problems and disputes about medical conditions.
- Always check that the insurance will cover the whole debt.
- Make sure you know who your insurer is and how to contact them in case you need to make a claim.
- If you think you have been the victim of mis-selling or find your claim is refused unreasonably, complain using the insurance company’s internal complaints procedure. If you are not satisfied with the response, take your complaint to the Financial Services Ombudsman.
Notes to editors:
*"Protection racket – CAB evidence on the cost and effectiveness of payment protection insurance" The full report and a summary of it are available from the press office or at www.citizensadvice.org.uk/publications/protection_racket
**A super complaint can be made by a designated group of consumer organisations on a specific issue. The complaint is a request to the OFT or other specified regulator to investigate an issue or a market that the consumer body believes is working against the consumer interest. The OFT or other specified regulator is required to publicly respond to a super complaint within 90 days to say whether:
a) they believe it is an issue – if not, why not
b) how they intend to deal with it.
This is the second super complaint to be lodged with the OFT by Citizens Advice since the new powers designed to end market abuses were introduced in 2002. The first was about doorstep selling and triggered OFT investigation, leading to tighter controls including improved cancellation rights.
Notes to editors:
- The Citizens Advice service is a network of independent charities that helps people resolve their money, legal and other problems by providing information and advice and by influencing policymakers.
For more information in England and Wales www.citizensadvice.org.uk
For more information and 2008/9 service statistics see Introduction to the service
For 2008/9 service highlights see the Citizens Advice service impact report
For 2008/9 social policy campaigning highlights see the Citizens Advice social policy impact report
- The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
- Most Citizens Advice service staff are trained volunteers, working at over 3,300 locations across England and Wales.
- Citizens Advice Bureaux in England and Wales advised 2 million clients on 6 million problems from April 2008 to March 2009
- Advice and information www.adviceguide.org.uk
- Volunteer hotline 08451 264264 (local rate)
- Citizens Advice Guide to your rights, second edition: January 2008 - over 600 pages of practical, independent CAB advice. An invaluable resource for any bookshelf - available from all good bookshops; price £11.99; ISBN: 9780141034089
- Follow Citizens Advice on Twitter:
 twitter.com/CitizensAdvice
- Subscribe to Citizens Advice press releases via RSS news feed: www.citizensadvice.org.uk/pressoffice
|
