Payment Protection Insurance has rarely been out of the headlines in recent years. Millions of consumers have reclaimed billions of pounds as a result of polices that were sold by banks and insurers.
The policies were typically sold to cover repayments on mortgages and other loans. They were usually sold at the same time as the loan was set up, and often customers weren’t told that they were buying extra insurance. The cost was often hidden in the general cost of the loan itself and so many customers were unaware that they had actually bought a separate policy. They generated huge commissions for the banks, building societies and insurers that sold them.
The problem with many policies was that policyholders could never have made a successful claim, either because they suffered from an illness or medical condition at the time they took the policy out or because they were self-employed, or even unemployed at the time the policy started, meaning that any claim would have been unsuccessful.
Although many policyholders have already claimed, millions have still to do so, and need to do it before the claims deadline of August 2019.
Something like £35bn has already been paid out in claims and some reckon that the final total could be closer to £50bn. That’s a huge amount of money, it’s fifty thousand million pounds and it’s been great for the banks to use as an excuse for poor performance over the last few years, as in “Profits are down because we had to set so much money aside to pay PPI claims.”
And, to my mind, it begs another important question. If £30bn has been paid out, where has it all gone? If you assume that there are 77 million people living in the UK and we all claimed on one of these policies than that would be a total of just under £400 each. That’s for every man, woman, and child in the country. I haven’t made a claim, and I know hundreds of others who haven’t either. So if the figure of £50bn is accurate, then who got all of the money?
