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Date: 1st Apr 2009

Opinion Piece: Payment Protection Insurance

Jane Gunnion, head of litigation at Rees-Roberts Solicitors

Last year saw a sharp increase in the number of claims for the miss-selling of Payment Protection Insurance (PPI) with 19 firms prosecuted by the Financial Services Authority (FSA) over poor selling practices.

PPI is often sold alongside a loan to provide cover if the debt repayments cannot be met. However, the FSA found that many customers had not been informed about their rights to claim or that the cost of the cover is added to the loan, along with interest.

Many people are not eligible to receive a payout, such as the self employed, the unemployed or people with health problems. If the agreement is in joint names the PPI generally only covers the first named borrower, so it's not much good if the second named becomes incapacitated or loses their job.

Even if an individual is covered if they are made redundant they will generally find that if they get another job, but on less money, the policy will not pay out as it tends to stipulate that they must have a Jobseeker's Agreement for the whole time that they are claiming under the policy.

It's worth noting that only four percent of policies paid out last year and eighty five percent of claims were rejected out of hand. Anyone caught out by miss-selling should contact The Financial Ombudsman Service or Citizens Advice Bureau.