Delays hit some PPI paybacks as lending firms go bust

Delays hit some PPI paybacks as lending firms go bust

Borrowers wrongly sold expensive payment protection insurance policies by specialist loans companies are facing huge delays when they claim for compensation. Most lenders sold PPI, which is designed to pay out if borrowers lose their income through redundancy or illness, and many are now paying back thousands of pounds to people who claim the plans were inappropriately sold to them for various reasons.

Many of the payment protection insurance policies were sold to customers who were not entitled to take out the insurance due to their age or pre-existing health restrictions. There are also cases of consumers either not knowing the insurance was included or being told it was a requirement of the loan or credit agreement being approved.

The sales staff selling the policies, whilst making vast commissions were not following any key facts process or due dilligence required in the recommendation of these types of products. But some lenders - especially smaller firms specialising in riskier borrowers - have gone bankrupt or dissolved themselves, effectively eluding the liability for any PPI mis-selling.

Consumers may face long delays in receiving money back on mis-sold PPIs from these types of lenders. In these cases claimants must appeal for refunds of premiums to the Financial Services Compensation Scheme, the organisation that pays out when financial companies fail.

This process can take years and consumers have no redress against the company for the sale of the PPI unless they go to the Financial Services Compensation Scheme which is a lengthy process that can take up to a year.