Banks PPI compensation loophole can be closed!
Banks have been claiming that customers have been sold the wrong type of PPI rather than mis sold PPI altogether as a means to cut hundreds of pounds from these customers compensation payments.
Between 1990 and 2010 some 46 million PPI policies were sold to customers who took out loans or credit cards. In many cases these were mis sold PPI policies as the policyholders were ineligible to claim the cover under the policy. In April 2011 the banks were ordered to pay compensation for mis sold payment protection insurance when they lost their legal battle with the Financial Conduct Authority and since then banks have paid out £18.8bn in payment protection insurance compensation.
Whilst banks have in most cases paid the appropriate levels of redress they can cut these costs substantially by using the loophole known as alternative or comparative redress. With comparative redress the bank claims that the customer would have bought an alternative form of PPI and so paid premiums for this – in these circumstances the compensation paid would be the difference between the premiums rather than a full refund of the premiums paid with interest.
Solicitor Paul Cahill commented:
“We’ve been aware of this loophole and the banks practices regarding comparative redress from the start. When we reclaim mis sold PPI for clients we can address this to ensure they get the compensation they deserve. After all the banks have mis sold to them once already – we don’t want them to have to stomach yet more mis selling by being short-changed with their PPI compensation too!”
Content correct at time of publication