UK PPI coverage the subject of controversy
The United Kingdom’s Financial Ombudsman Service, a mediation organization that works to settle disputes between consumers and UK businesses, has released information concerning the population’s stance on payment protection insurance (PPI). PPI is a type of insurance that is meant to protect loans and ensure repayment. This type of insurance is quite popular in the UK, but not amongst consumers. It is being reported that UK consumers are complaining about this type of insurance coverage, and the companies providing the coverage, in droves.
Claims that PPI is part of the largest insurance scandal in the UK
According to the reports, PPI spurred a total of 157,716 disputes in 2011. This is the most any single insurance product has ever generated in the UK. PPI is often required for consumers to obtain loans or credit cards, but most consumers are not aware they are purchasing this coverage at the time they receive a loan or a credit card.
Lack of information and clarity cited as major problem
The ombudsman notes that it has served as mediator for more than 260,000 disputes between consumers and financial service companies in 2011, up by 26% over 2010. These disputes were sparked when financial service companies began issuing claims to PPI providers, accusing consumers of failing to pay for their loans or lines of credit. This caused outcry amongst consumers who argued that they did not have PPI coverage, when in fact they did. The mediator claims that the problem is so severe because financial companies were not forthcoming in informing consumers that they were purchasing the coverage as a bundled deal.
Troublesome economy may further encourage problems for PPI
The economic stresses from the previous years are persisting into 2012. These woes have put a great deal of pressure on the country’s financial services companies and insurance providers. The Financial Ombudsman Service expects that disputes concerning payment protection insurance will continue to emerge if companies are not more informative about the products they are selling consumers.