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Payment Protection Insurance Ruling

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A widely mis-sold and obscenely profitable type of insurance for the banking industry often forced upon people despite them not qualifying for it in the first place.

I see the BBA are fighting the proposed FSA regulations. It doesn't surprise me tbh, given the vast profits generated by PPI.

(Home insurance pays out around 55% of collected premiums

PPI on loans/credit cards/store card pays out around 13% of collected premiums!)

Insurance compensation ruling worth up to £4.5bn due today

20 Apr 2011

http://www.thisislondon.co.uk/standard-business/article-23943061-insurance-compensation-ruling-worth-up-to-pound-45bn-due-today.do

A High Court judge gives his ruling today in a challenge brought over new regulations to control the selling of payment protection insurance (PPI) to borrowers.

Mr Justice Ouseley, sitting in London, was told at a hearing in January that the regulations could cost the industry £4.5 billion.

He will announce his decision today in an action brought by the British Bankers' Association against the Financial Services Authority (FSA) and the Financial Ombudsman Service over the principles and guidance which came into force in December.

Lord Pannick QC, for the association, told the judge the FSA estimated implementation of the proposals could amount to £3.2 billion based on a 20% take-up by those contacted who bought PPI policies since 2005.

"If that assumption is an underestimate of the response rate, the costs are going substantially to increase," he said.

The FSA estimates PPI providers will have to pay out up to £1.3 billion in compensation for new complaints received during the coming five years.

Lord Pannick said this could lead to 35 insurance companies failing with the resulting refunds to borrowers falling on the Financial Services Compensation Scheme.

The new regulations aim to ensure consumers are treated fairly, both when they buy PPI and when they complain about being mis-sold the cover.

They require providers to talk potential customers through the key features of a policy, rather than just provide them with a document giving the information, while they will also have to be able to show that it was made clear to the consumer that the cover was optional.

But the banks want the court to quash the regulations because they will not only apply to new policies sold after the beginning of December, but also to complaints relating to cover sold before the new regime was brought in.

Lord Pannick said the banks recognised that when a PPI sale was conducted outside rules which applied at the time it was "right and proper" that compensation should be paid.

But he said the banks are now being held to "more onerous standards".

"Any requirement for firms to determine complaints by reference to standards retrospectively imposed by the FSA and altering liabilities of firms to their customers would be unlawful."

PPI covers debt repayments if the holder is unable to work due to an accident or illness or if they lose their job.

But it has been criticised after research found it had been mis-sold to many consumers who would never be able to claim, while others felt pressured into taking it out alongside a loan or credit card

They require providers to talk potential customers through the key features of a policy, rather than just provide them with a document giving the information, while they will also have to be able to show that it was made clear to the consumer that the cover was optional.

The banks are worried that if they actually have to explain the policy to people they will opt out of the insurance. Currently, banks and finance co's do as little as possible to draw attention to PPI, hoping the customer will just sign up to this often unnecessary cost.

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A widely mis-sold and obscenely profitable type of insurance for the banking industry often forced upon people despite them not qualifying for it in the first place.

I see the BBA are fighting the proposed FSA regulations. It doesn't surprise me tbh, given the vast profits generated by PPI.

(Home insurance pays out around 55% of collected premiums

PPI on loans/credit cards/store card pays out around 13% of collected premiums!)

The banks are worried that if they actually have to explain the policy to people they will opt out of the insurance. Currently, banks and finance co's do as little as possible to draw attention to PPI, hoping the customer will just sign up to this often unnecessary cost.

Yeah, it's not a product which is of much use to many people when the cost is taken into account. Some players were much worse than others eg the large secured lending providers have sold a £25k premium on a £100k loan, and the policy covers you for the first five years of a 25 year loan, scandalous. At the other end of the scale some(a few) provider's policies were in line with guidance eg 6% of the loan repayment.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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