PPI, Tesco Loan and Self-Employment

Betty53

In 2005, I took out a Tesco loan for £25,000 repayable over 5 years. I also took out the PPI, which seemed reasonably priced (although I shall know to shop around next time!) I paid the final instalment on the loan in March 2010.

In July, 2007 - mid-way through the loan period - I left my paid employment and registered as self-employed and immediately contacted Tesco regarding the PPI to check whether the insurance would pay out if I couldn't make a payment due to lack of s/e income!!

In other words, although I have a small regular income (2 widow's pensions) I didn't have any guaranteed income from my self-employment at that time, while I was building up my business.

I was trying to save money everywhere and it seemed pointless to continue paying out the PPI; I was fairly sure they wouldn't pay out if I couldn't make a repayment due to lack of work + income... and I wanted to query if becoming self-employed would void the cover for illness too...

However, when I rang Tesco - or their PPI agents/department - I was told quite firmly that I should continue to pay the PPI and that the self-employment was no problem. I tried to explore and discuss things further but was told quite categorically that there was no problem.

Some time later - 9 months to a year (still struggling with money!) - I rang them again just to check... because it seemed incredible to me that any insurer would pay my loan repayment for me simply because my business hadn't made enough money that month! But, again, I was told I should continue paying...

Although I finished paying the loan last year, reading MSE and forum posts, I now wonder whether I was given incorrect information.

Has anyone else changed their status from 'employed' to 'self-employed' during the term of a loan? And did it affect their PPI cover?

Any information would be gratefully received... although the business is successful now and I'm paying my way, I built up big credit card debts along the way and any refund of PPI would be helpful. (I'm going to do another post about all of that!!!)

financial_ombudsman_representative

Hello there Betty53.

I work for the Financial Ombudsman Service - the free service set up by law with the power to sort out problems between consumers and financial businesses. A number of PPI policies don't provide cover for people who are self-employed but each policy is different. From your post it's clear that you're unhappy with the information you've received about your policy and that you don't think it was suitable for you - so you might want to contact the business responsible to raise your concerns. If you remain unhappy with their response, the ombudsman service may be able to help on 0300 123 9 123 or at financial-ombudsman.org.uk.

Thanks
Phillipa

dunstonh

I was fairly sure they wouldn't pay out if I couldn't make a repayment due to lack of work + income...

They wouldnt. That isnt what PPI is for.

However, when I rang Tesco - or their PPI agents/department - I was told quite firmly that I should continue to pay the PPI and that the self-employment was no problem.

Which could well be correct. A good number of plans do cover the self employed. Some dont or some that do, have clauses that make it next to useless.

I rang them again just to check... because it seemed incredible to me that any insurer would pay my loan repayment for me simply because my business hadn't made enough money that month!

Again, they wouldnt pay out because you are not making enough money in that period.

Although I finished paying the loan last year, reading MSE and forum posts, I now wonder whether I was given incorrect information.

Based on limited information, you do appear to have been given correct information. However, some of your assumptions were wrong.

Has anyone else changed their status from 'employed' to 'self-employed' during the term of a loan? And did it affect their PPI cover?

Changing from employed to self employed doesnt mean it was mis-sold. The person dealing with it at point of sale can only look at then and known events.

However, a change of employment mid term will impact on the level of cover provided. e.g. you would expect the qualifying period to start again (i.e. period in employment/self employment before they will pay out). Some plans may exclude self employed and so on.

You may find that the better approach to any complaint is to go down the single premium with interest added route (if the PPI was not a standalone monthly payment). Rather than focus on areas that dont sound as if there are any issues.

Betty53

Thank you to the people who replied to this post... I appreciate the advice and guidance. Merry Christmas.