When credit consumers take out a new financial service such as credit, a loan or new mortgage they are also offered Payment Protection Insurance which protects them if they experience difficulties in paying for the loan by means of unemployment, injury etc.

Banks aren’t obliged to offer this service but if they do they are required to ensure they understand the background of the customer and are certain the PPI would cover them in the unforeseen.

Banks can exploit PPI in a few ways and the most common is simply allowing the customer to select PPI, simply by ticking a box and this releases the bank from the responsibility to correctly sell a customer the right product. If that customer happens to be unlucky enough to need the PPI, the chances are they will not be eligible for the product they have paid for.

The cover they buy could insure them for the wrong value of their financial service and in most instances if the unforeseen does happen, they are not eligible for the insurance. This has left thousands of customers in financial ruin when not being able to pay back a loan after an accident or cover their mortgage when they have been made redundant.

A second method is much worse, by means of signing a contract a customer can be unknowingly accepting to pay for PPI when buying a financial service; this is likely to be complexly written into the small print thus avoiding any legal indiscretion.

This kind of scamming has accounted for almost 1bn profit for the UK banks in the last year and with the number of unemployed remaining high this figure is likely to increase. It has reportedly affected over 8000 families in the UK in 2009. Many families are seeking compensation to claim back their PPI payments.

Want to find out more about PPI Claims, then talk to Dons LLP about how to choose the best legal advice for your needs.