TV taking on poor PPI - want to be involved?

Steve_01903

My wife had to take a loan out with Nat West to clear her previous loan and credit card arrears. They added PPI at 15% on top of the loan and charged a whopping 29% interest on the lot. However while she has a part time job she is a self employed non executive partner in my business, and as such can not be made unemployed or be loss income through being unable to work. She will therefore never be able to claim on this very expensive and unwanted product but at the time she was desparate to clear her arrears for which she was being persured.

Astaroth

Why cant she?

Unless the natwest policies have changed recently she would need to be working over 16 hours at the time of taking the loan out (most people cant get a loan if they are working under this anyway).... clearly she could become sick and be unable to fulfil either her duties as a non-exec board member and her part time job (I believe natwest even allow very short hours to be done by self employed people and still honour a sickness claim) or alternatively she could lose her job/ the company could fold.

To clarify you really need to speak to UK Insurance who underwrite the Natwest policies

ArchieB_2

The long and short of it is;

- the product is reasonably complex which leads to speculative claims that then skew the refusal stats.
- the PPI concept is sound, however anybody who purchases a tied Loan or Credit Card PPI product has seriously over paid - that is a fact proved when comparing products sold on a stand-alone basis.
- the high cost to the consumer generates huge commission for the banks/loan providers (not Insurers) which then results in sales people being so heavily incentivised to sell it that mis-selling is inevitable.

Also, I agree with Tootsie Roll – by asking for the three case studies (all negative) and not asking for the fourth (ie “PPI paid out and saved my home/car/lifestyle”), then how else can the request be viewed other than completely negative??

There are serious problems in the tied market but the piece MUST NOT confuse tied loan PPI for instance with Mortgage PPI, PHI or other useful protection products. All too often stories can act to turn the consumer off protection all together, which is damaging for the whole economy. All the threads you read on here about cancelling PPI and virtually no comment on how to replace the cancelled cover is another worrying trend.

I'd also be interested to see if the issue of consumer responsibility is raised. So many people clearly don't read any paperwork as is plane from some of the questions asked on the board. Until consumers start looking at what they are buying there will always be disapointments come claim time. How many people would spend £1000 on a TV without watching it in the shop first?? Not reading even the Key Facts document is the same except the risk of buying the wrong thing could be losing your home/car/happiness.

BrunoM

Newbie question - by PPI are people referring to "loan insurance" or also to the similar-seeming "credit card insurance"?

Astaroth

PPI = payment protection insurance

It therefore covers all the credit products including mortgages, loans, credit cards, overdrafts etc

As to ArchieB's comments - agree with most of them other than I would say that a growing number of people are now even buying TVs without seeing them working first - look at the number of posts there are about people saying that they have ordered unbranded/ unknown branded LCD screens etc off the internet and are asking if they are ok.

Consumers are demanding more protection but are taking less and less actions to protect themselves.

dickybeau

I worked for fist direct who incentivised people on the sale of this product and encouraged its staff to sell this hard. In recent weeks, I was exploring taking a loan or moving credit cards and came under unbelievable pressure to take out this product. what makes it all the more annoying is that i was unwell for 2 years from 2003-2005 and existed on halfpay and then a pension and first direct didn't notice any impact. in addition, my wife was unwell following a gall bladder problem and was on half pay for 3 months without visible impact and still they insisted that I needed this insurance policy. Like you say Martin, it is the manner in which the insurance is sold that should be of concern. In my experience, it is not always sold with the interests of the customer in mind. In first direct's case, the incentivisation of staff is the biggest driving force in this. I wonder how many banks do this. My daughter works for HSBC and they do similar things with credit card protection insurance. the truth is that these insurances generate large profits for the banks. And the poor souls need it because the profits are falling to mere billions as a result of charges being challenged.

Astaroth

Of cause the reality is that banks profits from personal/ private customers is falling and that was before the reduction in credit card charges (obviously more to follow as the OFT looks into other bank charges)

From a banks perspective it is good as 1) they get commission for selling the product 2) reduces their risk of debts not being repaid as the insurance company is the one that pays the loan in the event of a claim

Given the hard sell that we all receive on things like extended warranties from electrical stores, travel insurance from travel agents, dental insurance from dentists.... not really sure why PPI is so special to require to be called out above all the other warranties/ insurance or any other form of cross/ up selling